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The growth of the unauthorized (also called illegal or undocumented) alien population during the 1990s coupled with changes in the distribution of the population within the United States has increased interest in funding of emergency medical treatment for this population. Although unauthorized aliens are ineligible for most federal means-tested programs, all aliens regardless of status are eligible for emergency Medicaid. Statute requires that all Medicare-participating hospitals with emergency departments treat all medically unstable patients and women in active labor. Between FY2001 and FY2004, there were no other federal funds available for the specific purpose of reimbursing hospitals or states for emergency medical care provided to unauthorized aliens. On December 8, 2003 the President signed the Medicare Prescription Drug, Improvement and Modernization Act of 2003 ( P.L. 108-173 ) which contains a provision to provide reimbursement to states for emergency care afforded to unauthorized aliens. Additionally it is extremely difficult to ascertain the amount of money spent for emergency medical care for unauthorized aliens since most hospitals do not ask patients their immigration status. Currently, noncitizens' eligibility for federal Medicaid benefits largely depends on their immigration status and whether they arrived (or were on a program's rolls) before August 22, 1996, the enactment date of Personal Responsibility and Work Opportunity Reconciliation Act (PRWORA). Legal permanent residents (LPRs) entering after August 22, 1996, are barred from Medicaid for five years, after which coverage becomes a state option. States have the option to use state funds to provide medical coverage for LPRs within five years of their arrival in the United States. Refugees and asylees are eligible for Medicaid for seven years after arrival. After the seven years, they may be eligible for Medicaid at state option. LPRs with a substantial (10-year) work history or a military connection are eligible for Medicaid. LPRs receiving Supplemental Security Income (SSI) on or after August 22, 1996 are eligible for Medicaid since Medicaid coverage is required for all SSI recipients. Finally, in the case of LPRs sponsored for admission after 1997, the income and resources of their sponsor are "deemed" available to them when judging their eligibility. Nonetheless, all aliens regardless of status who otherwise meet the eligibility requirements for Medicaid are eligible for emergency Medicaid. The Medicaid program is authorized by Title XIX of the Social Security Act, as amended. It is a federal/state matching program of medical assistance for low-income persons who are aged, blind, disabled or members of families with dependent children. Generally, as noted above, noncitizens face additional eligibility restrictions for Medicaid. In general, unauthorized aliens are ineligible for Medicaid with the exception of emergency Medicaid. Emergency Medicaid covers unauthorized aliens, nonimmigrants, and LPRs within the first five years of arrival for emergency conditions if they meet the other eligibility requirements of the program. Unauthorized aliens who are otherwise eligible for Medicaid except for their illegal status may receive "medical assistance under Title XIX of the Social Security Act ... for care and emergency services that are necessary for the treatment of an emergency medical condition (as defined in Section 1903(v)(3) of such Act) of the alien involved and are not related to an organ transplant procedure." This language from the Personal Responsibility and Work Opportunity Reconciliation Act (PRWORA) of 1996 restates and carries forward a provision which had been enacted 10 years previously as an amendment to the Medicaid provisions of the Social Security Act. Section 1903(v)(3) defines "emergency medical condition" as: a medical condition (including emergency labor and delivery) manifesting itself by acute symptoms of sufficient severity (including severe pain) such that the absence of immediate medical attention could reasonably be expected to result in--(A) placing the patient's health in serious jeopardy, (B) serious impairment to bodily functions, or (C) serious dysfunction of any bodily organ or part. Like other Medicaid recipients, unauthorized aliens must demonstrate that they are state residents, and many are not (or are unable or unwilling to prove that they are). This is particularly true of unauthorized aliens requiring emergency hospital care during attempted illegal entries. To be eligible for emergency Medicaid, unauthorized aliens must also be poor and either aged, disabled, or members of a family with children. Working age single males, for example, are generally not eligible for any form of Medicaid regardless of their financial status or residence. The reimbursement provision in P.L. 108-173 is similar to a provision in the Balanced Budget Act (BBA) of 1997 which appropriated $25 million each year, FY1998 through FY2001, for additional funding for state emergency health services for unauthorized aliens. The BBA specified that the funds should be divided among the 12 states with the highest number of unauthorized aliens, based on estimates provided by the former Immigration and Naturalization Service (INS). The money was allocated to each state based on the number of unauthorized aliens in the state as a percent of the unauthorized population of all 12 states. According to a notice published in the Federal Register by HHS's Centers for Medicare and Medicaid Services (CMS), the funds were available to eligible states for both "emergency medical services furnished to unauthorized aliens who, except for their alien status, would otherwise qualify for Medicaid and for amounts paid for services furnished to aliens who do not meet the Medicaid eligibility requirements." The emergency medical services covered were those defined by the Social Security Act, SS1903(v)(3), quoted above. The notice included a table designating the 12 eligible states and their designated yearly allotments based on INS's estimates of their unauthorized alien population ( Table 1 ). Table 1 shows that 45% of the money appropriated in the Balanced Budget Act of 1997 for emergency services for unauthorized aliens was allocated to California which had 45% of the total unauthorized population of the 12 states. In addition, 89% of the total funding was allocated to the five states with the highest number of unauthorized aliens. The total cost incurred by the states for unauthorized aliens is often an issue since many contend that immigration, especially border control, is solely a federal issue. The federal government is wholly responsible for establishing immigration policy, and for policing the borders to keep out unauthorized aliens. Thus, some argue that the burden to pay for immigration related cost should be born by the federal government not the states. However, others note that the provisions in PRWORA which limited immigrant access to public benefits were the result of a desire that immigrants be self-sufficient and not rely on public resources to meet their needs. Additionally, proponents of the provisions in PRWORA did not want the availability of public benefits to constitute an incentive for immigrants to migrate to the United States. CMS collected data from the 12 states with the highest number of unauthorized aliens on their total expenditures on emergency medical expenses for unauthorized aliens. Table 2 shows total emergency health service costs for unauthorized aliens, including both emergency Medicaid and expenditures on emergency services for individuals who did not meet the Medicaid eligibility requirements. It is important to note that these costs are reported by the states, and different states use different accounting procedures. It is unlikely, for example, that New Jersey and Washington spent no money on emergency services for unauthorized aliens. The data shown in Table 2 are the closest approximation available of the cost of emergency services for unauthorized aliens. With the caveats that the data reflect emergency services as defined by Medicaid and that differences in the percent paid by states may be the result of state differences in accounting procedures, the data show for those reporting both federal and state shares that the federal government pays more than half the cost of emergency services for unauthorized aliens. California, the most heavily impacted state, reported that 53% of its emergency costs for unauthorized aliens was reimbursed by the federal government. Maryland reported that 50.1% of its emergency cost was reimbursed, which is the smallest proportion of the states that reported both federal and state shares. In May 2004, the Government Accountability Office (formerly General Accounting Office) (GAO) released a study entitled Undocumented Aliens: Questions Persist about Their Impact on Hospitals ' Uncompensated Care Costs . The study concluded that since hospitals do not generally collect information on patients' immigration status, an accurate assessment of the impact of unauthorized aliens on hospitals' uncompensated care costs "remains elusive." GAO surveyed 503 hospitals, but as a result of the low response rate to the survey, was unable to determine the cost of uncompensated care provided to unauthorized aliens. In addition, over 95% of the hospitals which responded to the survey used the lack of a Social Security number as the only method to identify unauthorized aliens. It is unclear whether this method over or under estimates the amount of care provided to unauthorized aliens. The GAO study also reviewed the reported Medicaid spending for the 10 states with the highest estimated unauthorized populations: Arizona, California, Florida, Georgia, Illinois, New Jersey, New Mexico, New York, North Carolina, and Texas. Although states are not required to report to CMS the amount of Medicaid expenditures for unauthorized aliens, several states provided data or suggested to GAO that most of their emergency Medicaid expenditures were for services provided to unauthorized aliens. In addition, five of the states reported that more than half of emergency Medicaid expenditures were for labor and delivery services. GAO found that emergency Medicaid expenditures for the 10 states have increased over the past several years but remain a small proportion, less than three percent, of each state's total Medicaid expenditures. Nonetheless, the study found that, between FY2000 and FY2002, in nine of the 10 states reviewed the state's emergency Medicaid expenditures grew faster than the total Medicaid expenditures. In addition, the Illegal Immigration Reform and Immigrant Responsibility Act (IIRIRA) of 1996 authorized reimbursement of public hospitals and certain nonprofit hospitals for emergency medical assistance to unauthorized aliens. The provision, which is to be administered by the Attorney General in consultation with the Secretary of HHS, has not been implemented to date. The funding is subject to a number of restrictions, as follows: Funding is "subject to such amounts as are provided in advance in appropriation Acts." To date no funds have been appropriated. Funds are available for reimbursement "only to the extent that such costs are not otherwise reimbursed through any other Federal program." No payment can be made "with respect to services furnished to an individual unless the immigration status of the individual has been verified through appropriate procedures" established by the Secretary of HHS and the Attorney General. Obviously, the lack of an appropriation has been the primary impediment to the implementation of this provision. However, according to HHS and former INS officials, the other restrictions would also pose difficulties. First, it is difficult to determine that no other federal funding exists, given the availability of other non-specific funding sources (e.g., Medicaid DSH payments, discussed below). Second and probably more seriously, there is no procedure for determining the immigration status of hospital patients. IIRIRA also authorized reimbursement of state and local governments for emergency ambulance services provided aliens injured while crossing U.S. borders while in state custody. In 1997, the Conference Committee on the FY1998 Commerce, Justice, and State (CJS) Appropriations Act adopted the recommendation of the House Appropriations Committee for "a pilot project for reimbursement for emergency ambulance services in Nogales, Arizona." The Nogales pilot project began at the end of FY1998. A subsequent report to Congress on the feasibility of expanding the Nogales project, did not recommend expanding or continuing the project since the Border Patrol had to redirect enforcement resources to administer the reimbursement of ambulance costs. The report suggests that if Congress wants to create a program for reimbursement that it "should develop a coordinated policy that includes the Department of Health and Human Services (HHS), State and local health services, and other authorities. We do not believe that under current law the HHS has the authority to reimburse States for this activity." Although there is no Medicaid funding for the specific purpose of reimbursing hospitals for the cost of unauthorized aliens, the Medicaid statute requires that states make disproportionate share (DSH) adjustments to the payment rates of certain hospitals treating large numbers of low-income and Medicaid patients, including unauthorized aliens. These payments implicitly recognize the disadvantaged situation of hospitals treating large numbers of Medicaid patients and other patients with no insurance. States must define hospitals in their state Medicaid plans qualifying as DSH hospitals and the DSH payment formulas. However, the identification of unauthorized aliens among the Medicaid patients and uninsured as a component of either the DSH designation or payment formula is not required, and thus, there are no data on the amount of DSH payments used for unauthorized aliens. There were several bills introduced in the 107 th Congress which would have created a grant program to provide additional funding to states for emergency health services for unauthorized aliens. These programs would have been similar to the one created in BBA97. Although none of the bills passed, the bills are similar to legislation that has been introduced in the 108 th Congress. S. 169 introduced by Senator Kyl on January 24, 2001, would have authorized $2 billion in each fiscal year FY2002-FY2005 to be divided among the 17 states with the highest number of unauthorized aliens. S. 2449 introduced by Senator Bingaman on May 2, 2002, would have appropriated $50 million in each fiscal year FY2003-FY2007 to be divided among the 15 states with the highest number of unauthorized aliens. The bill would have also amended PRWORA to allow states to use state funds to provide health benefits to all noncitizens regardless of immigration status. On June 24, 2002, during the Senate Finance Committee mark-up of the Work, Opportunity, and Responsibility for Kids (WORK) Act of 2002 (substitute H.R. 4737 ), Senator Kyl introduced an amendment that would have authorized additional funding to certain states to cover the emergency medical costs of treating unauthorized aliens. The measure was defeated. Section 1011 of The Medicare Prescription Drug, Improvement and Modernization Act of 2003 ( P.L. 108-173 ) signed into law on December 8, 2003, provides reimbursement states for emergency care afforded to unauthorized aliens. For each fiscal year FY2005-FY2008 the provision appropriates $250 million of which: $167 million is allotted to states based on the percentage of unauthorized aliens residing in the state compared to the total number of unauthorized aliens in the United States; and $83 million is allocated to the six states with the highest percentage of unauthorized alien apprehensions for the fiscal year, based on the percentage of apprehensions in the state compared to the number of apprehensions for all such states. P.L. 108-173 directs the Secretary of Health and Human Services (HHS) to pay local governments, hospitals, or other providers located in the state (including providers of services rendered through an Indian Health Service facility) for the costs of furnishing emergency health care services to unauthorized aliens during that fiscal year. It also requires the Secretary of HHS to establish, no later than September 1, 2004, a process, including measures to protect against fraud and abuse, under which entities would apply for reimbursement for claims associated with emergency health care services provided to unauthorized aliens. Advanced payments will be made quarterly based on the applicants' projected expenditures. (See Appendix for the preliminary allocations under this provision.) On July 21, 2004, CMS released a policy paper outlining the proposed implementation approach and general framework for submitting claims under Section 1011. The paper states that since the legal obligation to provide emergency treatment only applies to those hospitals participating in the Medicare program, that only Medicare participating hospitals can apply to receive funds under Section 1011. According to the CMS policy paper, the grant program would also cover ambulance transportation of an alien to a hospital to be treated for an emergency medical condition. CMS also requires that providers seek funds from all available funding sources before requesting payment under Section 1011. CMS proposes a single-payment pool for each state from which each provider in the state would receive payment on a quarterly or annual basis. The CMS policy paper states that for payment under Section 1011, hospitals must collect and maintain information regarding the immigration status of the patients. CMS proposes that providers request information on a patient's citizenship or immigration status prior to discharge, but after the patient is identified as self-pay and not Medicaid eligible. Individual level immigration information would be maintained at the hospital and not routinely transmitted to CMS, as CMS would designate a contractor to review and determine the number of claims and the percentage of patients qualifying for reimbursement. CMS contends that this approach would minimally increase paperwork for hospitals, as much of the information can be gathered from existing Medicaid enrollment forms. Nothing in the paper suggests that the information should be transmitted to the Department of Homeland Security (DHS); however, some are concerned that DHS could use hospital records to locate unauthorized aliens, making aliens less likely to seek medical treatment. Reportedly, after receiving comments on the proposed implementation plan (i.e., the policy paper), CMS has revised the policy, and will not require providers to ask about a patient's immigration status to receive reimbursement under SS1011. In addition, the conference report for the Consolidated Appropriations Resolution, 2003 ( H.Rept. 108-10 ) instructs the former INS to provide a one-time payment to hospitals in Cochise, Pima, Santa Cruz, and Yuma Counties, Arizona for unreimbursed costs associated with treating unauthorized immigrants. The conferees directed the payment because they "believe hospitals in Cochise, Pima, Santa Cruz and Yuma Counties, Arizona are bearing an unfair burden as a result of illegal immigrants injured as a result of interaction with the Border Patrol, ... [and that] this one-time funding infusion is appropriate until a nation-wide solution is developed in fiscal year 2003." The conferees also directed the former INS, in coordination with the Department of Health and Human Services, to provide a report by July 1, 2003 to the Committees on Appropriations with recommendations to address the issue of unreimbursed cost of treating unauthorized aliens. The "Local Emergency Health Services Reimbursement Act of 2003" ( S. 412 ) introduced by Senator Kyl on February 13, 2003, and its companion the companion bill ( H.R. 819 ) introduced by Representative Kolbe on February 26, 2003, are similar to Section 1011 in P.L. 108-173 . S. 412/H.R. 819 would appropriate $1.450 billion for each fiscal year FY2004 to FY2008 to reimburse states for emergency care to unauthorized aliens. Of the monies appropriated: $957,000,000 would be allotted to states based on the percentage of unauthorized aliens residing in the state compared to the total number of unauthorized aliens in the United States; $493,000,000 would be allocated to the six states with the highest percentage of unauthorized alien apprehensions for the fiscal year, based on the percentage of apprehensions in the state compared to the number of apprehensions for all such states. The bills specify that monies paid to the states from this program may only be used to make payments for costs incurred by the provision of emergency health care to unauthorized aliens, and require the reallocation of unused funds. H.R. 690 introduced by Representative Gutierrez on February 11, 2003 would extend medicaid coverage for organ transplants to aliens under the age of 18 who are residing in the United States on the date that the bill is enacted or who develop the medical condition necessitating the transplant while residing in the United States. Representative Flake introduced H.R. 1515 on March 31, 2003. H.R. 1515 would provide reimbursement for the unreimbursed costs of emergency medical care to aliens paroled into the United States for medical reasons. The bill would direct the Secretary of the Department of Homeland Security to create a program to reimburse hospitals and other providers of emergency medical care (e.g., physicians and ambulance services) for care to aliens paroled into the country for medical reasons, and would authorized such sums as necessary for the program. H.R. 3722 was brought to the floor under suspension of the rules on May 17, 2004. The vote to suspend the rules and pass H.R. 3722 occurred on May 18, 2004 at which time the motion was defeated 331 to 88. H.R. 3722 introduced by Representative Rohrabacher on January 21, 2004 would have amended SS1011 of P.L. 108-173 to place certain conditions on the reimbursement to health care providers for emergency health services for unauthorized aliens. H.R. 3722 would have required as a condition of reimbursement that eligible providers obtain information on the alien's citizenship, immigration status, address in the United States, financial data which is required of non-indigent patients including health insurance status, and current employer in the United States (if applicable) as well as a biometric identifier. The bill would have also required that the health care provider submit the alien's information in an electronic format to the Secretary of Homeland Security. H.R. 3722 would have also made removable (deportable) aliens who do not provide payment for the provided health services, and do not give accurate information on the required questions or a biometric identifier. In addition, H.R. 3722 would have made employers of unauthorized aliens for whom the hospital received financial reimbursement for medical services, liable to HHS for the amount of the payment with certain exceptions. Lastly, the bill would have required the Secretary of State to do a study on the appropriateness of negotiating treaties under which countries provide for the international medical evacuation of their nationals who require emergency health care in the United States and provide funding through visa surcharges to pay for the evacuation of nationals seeking emergency health care from countries without treaties. Those in favor of H.R. 3722 argued that the bill would not have forced hospitals to report unauthorized aliens as only those hospitals who wished to be reimbursed for medical expenses provided to unauthorized aliens would have had to send reports to DHS. Those opposed to the bill argued that the added paperwork would be burden to hospital staff, and would detract from their other duties. Introduced on May 13, 2004 by Representative Jo Ann Davis, H.R. 4360 would make the grant program to provide reimbursement for emergency care afforded to unauthorized created in SS1011 of The Prescription Drug Act ( P.L. 108-173 ) permanent in FY2009, and beginning in FY2009 would allocate $250 million from foreign aid funds to pay for the reimbursement. This amendment was introduced by Representative Thomas Tancredo during floor debate on the FY2005 appropriations bill for the Departments of Labor, Health and Human Services, and Education, and Related Agencies ( H.R. 5006 ). The amendment would have prohibited CMS from using any appropriated funds to pay the salaries of personnel administering the grant program, created in Section 1011 of The Prescription Drug Act of 2003, which provides reimbursement for emergency care afforded to unauthorized aliens. The amendment failed by voice-vote. There are several policy issues concerning the provision of federal funding for states with large populations of unauthorized aliens. As discussed above, the provisions in PRWORA which limited immigrant access to public benefits were the result of a desire that immigrants be self-sufficient and not rely on public resources to meet their needs. Additionally, proponents did not want the availability of public benefits to constitute an incentive for immigrants to migrate to the United States. Nonetheless, others argue that immigration is solely a federal issue. The federal government is wholly responsible for establishing immigration policy, and for policing the borders to keep out unauthorized aliens. Thus, they argue that the burden to pay for immigration-related cost should be born by the federal government, not the states. Additionally, some question the wisdom of only providing funding to help cover the costs of unauthorized aliens when no federal funds are provided to states to cover the emergency medical costs of nonimmigrants and legal permanent residents who have been in the country for less than five years. Another issue concerns the lack of reliable data on the number and distribution of unauthorized aliens. As the 2000 census of the U.S. population is being released, preliminary data analyses offer competing population totals that, in turn, imply that illegal migration soared in the late 1990s and that estimates of unauthorized residents of the United States have been understated. The Department of Homeland Security estimates that there are about 7 million unauthorized aliens living in the United States. In testimony before the House Committee on the Judiciary Subcommittee on Immigration and Claims, Jeffrey Passel, a demographic researcher at the Urban Institute, offered an estimate of 8 to 9 million unauthorized residents. At the same hearing, economists from Northeastern University using employment data reported by business establishments as well as 2000 census totals concluded that the unauthorized population may be 11 million. These discrepancies suggest that assessments of the unauthorized population by state may be an inaccurate and problematic basis for distributing grant funds. None of these estimates addresses the distribution among states of the unauthorized population; however, anecdotal reports suggest that unauthorized aliens may be dispersed among many states rather than concentrated in a few states as previously presumed. If this is true, a program which limits the number of states eligible for additional reimbursement for medical treatment of unauthorized immigrants may exclude smaller states that have proportionally high numbers of unauthorized aliens in relation to their population, but not high absolute numbers of unauthorized aliens.

There has been interest in the amount of money spent, as well as the amount of federal funds available to provide emergency medical care to unauthorized (illegal) aliens in the United States. It is extremely difficult to ascertain the amount of money spent for emergency medical care for unauthorized aliens since most hospitals do not ask patients their immigration status. Additionally, prior to the passage of the Medicare Prescription Drug, Improvement, and Modernization Act of 2003 (P.L. 108-173) on December 8, 2003 there were no federal funds available for the specific purpose of reimbursing hospitals or states for emergency medical care provided to unauthorized aliens (undocumented immigrants). Although the Personal Responsibility and Work Opportunity Reconciliation Act of 1996 (PRWORA) barred unauthorized aliens from receiving most Medicaid benefits, they are eligible for emergency Medicaid services. Unauthorized aliens are also eligible for emergency medical services provided by the states. The Medicare Prescription Drug, Improvement, and Modernization Act of 2003 (P.L. 108-173) signed into law on December 8, 2003 includes a provision, SS1011, to provide reimbursement to states for emergency care afforded to unauthorized aliens. For each fiscal year FY2005-FY2008 the provision appropriates $250 million to states to be distributed based on estimates of the number of undocumented aliens residing in the state and on the number of apprehensions for the six states with the highest number of apprehensions. This program is similar to one created in the Balanced Budget Act of 1997 (BBA97) which had expired. In addition, the Illegal Immigrant Reform and Immigrant Responsibility Act of 1996 (IIRIRA) authorized reimbursement of public hospitals and certain nonprofit hospitals for emergency medical assistance to unauthorized aliens, and reimbursement of state and local governments for emergency ambulance services provided aliens injured while crossing U.S. borders while in custody. Neither program has been funded. However, in FY1998 Congress appropriated money for a pilot program in Nogales, Arizona to attempt to reimburse state and local governments for ambulance services. INS concluded from the pilot program that reimbursement for ambulance services was not a feasible program. H.R. 1515 would provide reimbursement for the costs of emergency medical care and ambulance services furnished to aliens paroled for medical reasons. The provisions in PRWORA which limited immigrant access to public benefits were the result of the desire that immigrants be self-sufficient and not rely on public resources to meet their needs. Additionally, proponents did not want the availability of public benefits to constitute an incentive for immigrants to migrate to the United States. Nonetheless, many contend that since the federal government is wholly responsible for establishing immigration policy, and for policing the borders to keep out unauthorized aliens the burden to pay for immigration related costs should be born by the federal government not the states. This report will be updated as needed.

Abused, neglected, or abandoned children who also lack authorization under immigration law to reside in the United States (i.e., unauthorized aliens) raise complex immigration and child welfare concerns. In 1990, Congress created an avenue for unauthorized children who become dependents of the state juvenile court to remain in the United States legally and permanently as lawful permanent residents (LPR) under the Immigrant and Nationality Act (INA). If an LPR meets the naturalization requirements set in the INA, he or she can become a U.S. citizen. The Special Immigrant Juvenile was originally conceived for a small number of children of unauthorized alien parents who were declared dependent by state juvenile courts. Although the unauthorized alien resident population in the United States has grown substantially since 1990, the number of SIJs who became LPRs remained under 1,000 per year until FY2008. In that year, Congress enacted provisions in the Trafficking Victims Protection Reauthorization Act of 2008 that altered the eligibility criteria for SIJ status as part of a package of amendments pertaining to unaccompanied alien children. Now, the recent increase in unaccompanied alien children arriving in the United States has cast a spotlight on SIJ status because these unaccompanied children may apply for, and some may obtain, LPR status through this provision. This report provides a brief explanation of the statutory basis of SIJ status and how it has evolved. It also presents statistics on the number of children who have applied for and received SIJ status since FY2005. The report concludes with a discussion of the applicability of SIJ status for unaccompanied alien children. Children of unauthorized aliens who had been abused, neglected, or abandoned have long posed complex immigration and child welfare concerns. Prior to the statutory provisions added to the Immigration and Nationality Act (INA) in 1990, unauthorized minors who were declared dependent on the state juvenile courts were akin to stateless individuals in that there was no home where they could return. They were perceived as a particularly vulnerable group within the child welfare system, given the unique difficulties they faced as they transitioned into adulthood. For example, because they were not legally present in the United States, they could not be employed when they reached a legal working age. They would be subject to removal proceedings and deportation to a country where they might have little attachment or familiarity. The Immigration Act of 1990 ( P.L. 101-649 ) added the SIJ provision (among other major revisions) to the INA in response to growing concerns over foreign children in the United States who were homeless, orphans, or victims of abusive family situations. The provision enabled unauthorized alien children who become dependents of the state juvenile courts to remain in the United States legally and permanently. As originally enacted in 1990, the language establishing SIJ status was fairly simple. To be eligible for SIJ, the foreign national was an individual (i) who has been declared dependent on a juvenile court located in the United States and has been deemed eligible by that court for long-term foster care, and (ii) for whom it has been determined in administrative or judicial proceedings that it would not be in the alien's best interest to be returned to the alien's or parent's previous country of nationality or country of last habitual residence. It was a small provision included in a major overhaul of immigration law with little fanfare. Seven years later, in response to a perception that some unauthorized aliens might have been relinquishing parental rights so that their children could become SIJs, Congress added language amending the INA to ensure that the SIJ benefit was not "sought primarily for the purpose of obtaining the status of an alien lawfully admitted for permanent residence, rather than for the purpose of obtaining relief from abuse or neglect or abandonment." The 1997 act expressly amended the definition of a "special immigrant juvenile" to include only those juveniles deemed eligible for long-term foster care based on abuse, neglect, or abandonment . In addition, provisions in the 1997 act required that a juvenile who was in the custody of the federal government obtain specific consent from the Department of Justice to permit a juvenile court, which otherwise would have no custody jurisdiction over the juvenile alien, to exercise jurisdiction for purposes of a dependency determination. In 2008, Congress amended the SIJ provisions in the INA to broaden their applicability. The Trafficking Victims Protection Reauthorization Act of 2008 (TVPRA, P.L. 110-457 ), among other things, amended the SIJ eligibility provisions to (1) remove the requirement that a juvenile court deem a juvenile eligible for long-term foster care and (2) replace it with a requirement that the juvenile court find reunification with one or both parents not viable. According to U.S. Citizenship and Immigration Services (USCIS) legal guidance issued in 2009, an eligible SIJ would include the following. [An unauthorized child] who has been declared dependent on a juvenile court; whom a juvenile court has legally committed to, or placed under the custody of, an agency or department of a State; or who has been placed under the custody of an individual or entity appointed by a State or juvenile court. Accordingly, petitions that include juvenile court orders legally committing a juvenile to or placing a juvenile under the custody of an individual or entity appointed by a juvenile court are now eligible. The TVPRA of 2008 also revised the "specific consent" provisions in the INA, transferring the authority from the U.S. Department of Homeland Security (DHS) to the U.S. Department of Health and Human Services (HHS), the federal department that also has custody of unaccompanied alien children. Subsequently, USCIS field guidance required that juveniles in the custody of HHS obtain "specific consent from HHS to juvenile court jurisdiction where the juvenile court order determines or alters the juvenile's custody status or placement." The process of becoming an SIJ and ultimately an LPR includes multiple steps, as the child petitions for SIJ status after the juvenile court decision and then applies to adjust to LPR status. In response to concerns that the process was taking too long, the law requires USCIS to adjudicate SIJ petitions within 180 days of filing. The law also states that the foreign national may not be denied SIJ status if he or she "ages out" because the determination is based upon the individual's age when the petition was filed. To promote efficiency, the otherwise mandatory personal interview may be waived for juveniles under 14 years of age who are seeking SIJ status , or when it is determined that an interview is unnecessary. A juvenile seeking SIJ status must demonstrate that an administrative or judicial proceeding has resulted in a determination that it would not be in the juvenile's best interest to be returned to the child's or the parent's previous country of nationality or country of last habitual residence. To pre-empt USCIS adjudicators from reconsidering the court's determination of abuse, abandonment, or neglect, t he field guidance states that the adjudicators "should f ocus on eligibility for adjustment of status and should avoid questioning a child about the details of the abuse, abandonment or neglect suffered." The law makes clear that a juvenile seeking SIJ status , at any stage of the SIJ process, cannot be required to contact the individual (or family members of the individual) who allegedly abused, abandoned, or neglected the juvenile. USCIS also must complete background checks, including biometric information clearances and name-checks of the juvenile . Juveniles seeking SIJ status are exempted from many of the inadmissibility grounds of the INA. Generally, foreign nationals in the United States without authorization, including unauthorized children, are barred from most federal public assistance benefits and programs. The exceptions are a narrow set of specified emergency services and programs, which include Medicaid for an emergency medical condition, immunizations and testing for and treatment of symptoms of communicable diseases, emergency disaster relief, and services or assistance such as soup kitchens, crisis counseling and intervention, and short-term shelters. Only LPRs with a substantial work history or military connection are eligible for the full range of programs, as are asylees, refugees, and other humanitarian cases (for at least five to seven years after entry). Those unauthorized juveniles who qualify as "unaccompanied alien children" are placed in the custody of the Department of Health and Human Services' (HHS) Office of Refugee Resettlement (ORR). Unaccompanied alien children are defined as those who lack lawful immigration status in the United States, are under the age of 18, and are either without a parent or legal guardian in the United States or no parent or legal guardian in the United States is available to provide care and physical custody. The unaccompanied alien children are cared for through a network of state-licensed ORR-funded care providers that provide classroom education, mental and medical health services, case management, and socialization and recreation. In May 2014, ORR reported that ultimately about 85% of the unaccompanied children in their custody are reunited with their families and that the average time in ORR care is about 35 days. The TVPRA of 2008 makes those juveniles granted SIJ status who had been in the custody of HHS or already receiving certain services provided by the ORR eligible for the Unaccompanied Refugee Minors' (URM) Program in ORR. Subject to the availability of appropriations, ORR is required to reimburse the state where the SIJ child resides for the state's foster care expenditures on behalf of the child. Children who receive SIJ status are not eligible for federal foster care through Title IV-E of the Social Security Act. Figure 1 shows a tenfold increase in the number of children filing I-360 petitions requesting SIJ status, spanning from 311 in FY2005 to 3,994 in FY2013. In terms of the number of I-360 petitions approved, the numbers have increased from 73 in FY2005 to 3,432 in FY2013. Data on the subsequent adjustments from SIJ status to LPR status typically lag, but they also show similar trends. Partial I-360 data for FY2014 (through May 2014) indicate that the upward trend is continuing. The LPR visa category of "Special Immigrants" encompasses several other subcategories and is statutorily limited to 7% of 140,000 (i.e., 9,800 foreign nationals) annually. Thus far, the total number of Special Immigrants admitted or adjusted each year has not reached the numerical limit. The natural or prior adoptive parents of the SIJ are not eligible for any immigrant benefits that LPRs and naturalized citizens may otherwise seek for their immediate relatives. As noted at the onset, the surge in unaccompanied alien children arriving at the Southwest border of the United States has heightened congressional interest in SIJ status. While the data presented in Figure 1 do not differentiate among those unauthorized children who arrived unaccompanied by their parents and those who were removed from their parents because of abuse, abandonment, or neglect, many observers point to the similarity in the spiking trends of both categories. An emerging issue is whether the increase in unaccompanied alien children since FY2008 is resulting in an increase in SIJ requests since FY2008. A recent survey of unaccompanied alien children found "abuse in the home" reported as one of the main reasons they fled. In addition, the Vera Institute of Justice conducted screenings of 11,719 unaccompanied children in ORR custody in FY2012 and found 3,724 children who might have been eligible for SIJ status. That an unaccompanied alien child is reunited with at least one parent or family member in the United States, some argue, does not prevent the child from seeking SIJ status based upon the abuse, neglect, or abandonment of the other parent. Some immigration and child welfare advocates assert that the number of children receiving SIJ status barely "scratches the surface of potentially eligible children," basing their conclusion on the assessment that many of the unaccompanied alien children arriving in the United States are eligible for SIJ status. While some call for giving unaccompanied alien children generous access to the SIJ process, others assert that such a practice would be an unintended consequence of the 2008 TVPRA changes to SIJ status. This conclusion is based upon the opinion that the 2008 TVPRA amendments were not intended to provide SIJ status to unauthorized alien children reuniting with family in the United States. As noted above, ORR reports that ultimately about 85% of the unaccompanied children in their custody are reunited with their families, an outcome that some argue makes the reunited children ineligible for long-term foster care as well as SIJ status. Some advocating for lower immigration and increased restrictions on immigration are also calling for legislation to revise the SIJ criteria so reunification with either or both parents is not viable.

Abused, neglected, or abandoned children who also lack authorization under immigration law to reside in the United States (i.e., unauthorized aliens) raise complex immigration and child welfare concerns. In 1990, Congress created an avenue for unauthorized alien children who become dependents of the state juvenile courts to remain in the United States legally and permanently. Any child or youth under the age of 21 who was born in a foreign country; lives without legal authorization in the United States; has experienced abuse, neglect, or abandonment; and meets other specified eligibility criteria may be eligible for special immigrant juvenile (SIJ) status. Otherwise, unauthorized residents who are minors are subject to removal proceedings and deportation, as are all other unauthorized foreign nationals. The SIJ classification enables unauthorized juveniles who become dependents of the state juvenile court to become lawful permanent residents (LPR) under the Immigrant and Nationality Act (INA). If an LPR meets the naturalization requirements set in the INA, he or she can become a U.S. citizen. When Congress enacted provisions in the Trafficking Victims Protection Reauthorization Act of 2008, it altered the eligibility criteria for SIJ status as part of a package of amendments pertaining to unaccompanied alien children. Now, the recent increase in unaccompanied alien children arriving in the United States has cast a spotlight on SIJ status because these unaccompanied children may apply for, and some may obtain, LPR status through this provision. There has been a tenfold increase in the number of children requesting SIJ status between FY2005 and FY2013. In terms of approvals, the numbers have gone from 73 in FY2005 to 3,432 in FY2013. While the data do not differentiate among those unauthorized children who arrived unaccompanied by their parents and those who were removed from their parents because of abuse, abandonment, or neglect, many observers point to the similarity in the spiking trends of both categories. This report provides a brief explanation of the statutory basis of SIJ status and how it has evolved. It also presents statistics on the number of children who have applied for and received SIJ status since FY2005. The report concludes with a discussion of the applicability of SIJ status for unaccompanied alien children.

Federal government programs can be funded with two different types of spending: discretionary and mandatory. Discretionary spending is provided and controlled through annual appropriations acts. Discretionary programs include the operations of running executive branch agencies (e.g., federal wages and salaries) and can also include certain loans, grants, and other subsidy programs. Mandatory spending generally is controlled by laws other than appropriations acts. It includes spending on entitlement programs such as Social Security, and other outlays such as the farm commodity programs. Congress sets eligibility requirements and benefit formulas for mandatory programs. If recipients meet eligibility requirements, outlays are made automatically. Mandatory programs can be thought of as a multiyear appropriation in authorizing legislation (e.g., a farm bill). In the context of agriculture, mandatory spending programs can have (1) a payment formula (e.g., $1.95 per bushel minus the market price of corn, multiplied by the bushels produced on farm) or qualification criteria with no specified limit, (2) a statutorily authorized level of funding (e.g, $1.2 billion available for a conservation program during a fiscal year), or (3) an acreage allotment (e.g., enroll up to 250,000 acres nationally). Mandatory funds from the authorizing law are assumed to be available unless they are expressly reduced to smaller amounts by a subsequent act of Congress in the appropriations process or by the authorizing committees. The 2008 farm bill (the Food, Conservation, and Energy Act of 2008, P.L. 110-246 ) authorizes spending on many mandatory agricultural, conservation, nutrition, and bioenergy programs. Farm bills are viewed by many Members and most in the agricultural community--including farmers and bankers--as a "contract." They do not want the farm bill to be reopened before it expires, or funding reduced below "promised" levels by intervening laws or appropriations. The mandatory budget projection of the farm bill when it was enacted was $604 billion over 10 years. Two-thirds of this amount ($406 billion) was for domestic nutrition assistance (e.g., food stamps); this mandatory budget category is outside the scope of this report. Most of the rest, about $147 billion over 10 years, is funded through the Commodity Credit Corporation (CCC) in the U.S. Department of Agriculture (USDA). The remaining mandatory outlays in the 2008 farm bill are from the Federal Crop Insurance Corporation ($47 billion over 10 years) and the Agricultural Disaster Relief Trust Fund ($4 billion over 10 years). The CCC perhaps is best known as the funding mechanism for the mandatory farm commodity program payments that farmers receive from the USDA Farm Service Agency (FSA), and some of the conservation payments from the Natural Resources Conservation Service (NRCS) and FSA. The CCC also is or has been the funding source for a relatively small subset of USDA programs for foreign trade, bioenergy, rural development, agricultural research, and other programs. In the 2008 farm bill, the 10-year projection for mandatory budget outlays was $86 billion for the farm commodity programs, $55 billion for conservation, $4 billion for trade, $0.9 billion for bioenergy, $0.9 billion for horticulture/organic agriculture, $0.4 billion for research, and $0.2 billion for rural development. These are large pools of mandatory funding from which many programs are authorized to operate. The CCC is a permanently authorized, wholly owned government corporation that has the legal authority to borrow up to $30 billion at any one time from the U.S. Treasury (15 U.S.C. 714 et seq.). In many ways, it operates like a revolving line of credit that allows USDA to make program payments when they are needed, separate from appropriations. The CCC (1) borrows from the Treasury in advance of appropriations; (2) makes payments to recipients in the farm commodity and other programs according to formulas written into authorizing legislation; and (3) later repays the Treasury for the funds it borrows with appropriations from the annual Agriculture appropriations law. This appropriation usually is an indefinite "such sums as necessary" appropriation that may be more or less than the CCC's most recent year's outlays, but it nonetheless restores a level of borrowing authority. Historically, mandatory agricultural funding was reserved for the farm commodity programs that began in the 1930s. Because payments from these programs are tied to commodity prices, which are highly variable and difficult to predict or budget, the CCC was created to remove unpredictable funding issues from the annual appropriations process. The concept of funding other agricultural programs with mandatory spending has expanded in recent years to include some conservation, rural development, research, and bioenergy programs. This expansion has generated both concern and support. Some consider this expansion to be beyond the chartered purpose of the CCC, while others prefer the stability and consistency of mandatory funding to that of the appropriations process. Although Congress as a whole makes final funding decisions, the rise in the number of agricultural programs with mandatory budget authority from the authorizing committees has not gone unnoticed or untouched by appropriators. In recent years, appropriations bills have reduced mandatory program spending below authorized levels. These reductions, estimated by the Congressional Budget Office (CBO), are commonly referred to as "changes in mandatory program spending" (CHIMPS). CHIMPS can offset increases in discretionary spending that are above discretionary budget caps. Similarly, authorizing committees also have reduced mandatory spending levels that initially were enacted. Authorizers may make such reductions for two reasons. First, they reduce programs to offset spending increases for other mandatory programs within their jurisdiction (new authorizing laws that require pay-as-you-go budget rules). Second, they reduce programs to get credit for budget reconciliation (savings that are required when a budget resolution adopted by Congress forces many authorizing committees to reduce program spending to address budget deficits). The U.S. Constitution grants the power over appropriations (the power of the purse) to Congress. House and Senate rules create a division of labor through the procedural separation between authorizations and appropriations. Legislative committees (such as, for agriculture, the House Committee on Agriculture and the Senate Committee on Agriculture, Nutrition, and Forestry) are responsible for authorizing legislation. Appropriations committees (such as the House and Senate Appropriations Subcommittees on Agriculture, Rural Development, Food and Drug Administration, and Related Agencies) are responsible for annual appropriations. Procedural rules generally prohibit encroachment on committee responsibilities. However, as discussed above, multiyear appropriations for mandatory programs are provided in one step by authorizing legislation, and this bypasses the two-step authorization-appropriation process. The current tension over which committee is responsible for bringing final budget recommendations to the floor for certain agricultural programs--appropriators or authorizers--has roots dating to the 1930s and the creation of the farm commodity programs. Some of the farm commodity subsidies that are required by a farm bill are volatile and therefore difficult to budget because they depend upon both future market prices and yields. These payments resemble entitlements, and any appropriation that would be set in advance would likely be too little or too much. Thus a mandatory funding source--the Commodity Credit Corporation (CCC)--was created to remove an unpredictable funding issue from the annual appropriations process. This separation operated for many decades with little tension. But the dynamic changed, particularly in the late 1990s and in the 2002 farm bill, when authorizers began writing laws using mandatory funds for types of programs that typically were discretionary (for example, conservation programs to rehabilitate small watersheds and dams, rural development programs to improve small business opportunities, or agricultural research programs to fund university-based research). This created a sometimes more complicated and bifurcated process of establishing budget authority for certain agricultural programs. Tension arose over who should make final funding decisions for these activities that were typically discretionary. Should authorizers use multiyear mandatory funding that is set in permanent law outside the appropriations process? Or should appropriators determine funding on an annual basis in appropriations acts? The following specific questions have been raised: Appropriators ask whether creation of the CCC in the 1930s for the hard-to-predict farm commodity programs justifies modern mandatory spending on programs that are not highly variable and typically are considered discretionary. Given the use of CHIMPS in recent Agriculture appropriations bills, appropriators apparently believe that such mandatory spending is not always appropriate. The authorizing committees contend that appropriators in recent years have not funded the Agriculture Committees' priorities as much as authorizers had desired. Authorizers therefore maintain that they are justified to write legislation using the mandatory funding at their discretion. In a broader context, suppose that an appropriations subcommittee knows the amount of appropriations needed for a desired level of activity. With enough foresight about the use of CHIMPS, those goals could be met with a smaller discretionary spending allocation (the "302(b)" allocation) than the desired level. Some may suggest that a lower discretionary allocation to one subcommittee (assuming there will be CHIMPS) potentially allows other subcommittees to receive a higher allocation. Ultimately, Congress as a whole--not individual committees--makes the final funding decisions when it enacts laws and appropriations. Congress may fund programs both in authorizing laws and in appropriations acts. Some say that tension among committees, interest groups, and political parties is part of the process by which Congress enacts laws and appropriations. In general, the production agriculture community has not raised strong opposition to most of the recently enacted reductions in mandatory programs because the farm commodity programs have not been targeted. Nonetheless, they are not supportive of any reductions that increase funding for nonagricultural programs. Conversely, environmental and conservation supporters have been more vocal and expressed significant concern over the reductions--by both authorizers and appropriators--because many cuts have targeted conservation programs. These groups argue that when authorizers reduce conservation funding they undercut many of the programs that generated political support for the farm bill's initial passage. They also argue that cuts by appropriators circumvent commitments made in the farm bill by the authorizers. The 2002 and 2008 farm bills ( P.L. 107-171 and P.L. 110-246 , respectively) used mandatory funding from the CCC to support an increasing number of conservation, rural development, and other programs. The funding levels for these mandatory programs do not need to be determined in the annual appropriations process, since the authorizing committees set the eligibility rules, payment formulas, and/or mandatory funding levels in authorizing legislation. Funding for mandatory programs is thus available based on the authorization without appropriations action. In reaction to this growing use of mandatory funding, some appropriations bills have reduced or stopped funding for these newly mandatory programs, and used the savings to allow higher spending for certain discretionary programs. These CHIMPS have not affected the farm commodity programs or the nutrition assistance programs such as food stamps, both of which are customarily accepted by appropriators to be mandatory programs. When appropriators limit mandatory spending, they usually do not change the authorizing law. Their action has the same effect as changing the law, but only for the one year to which the appropriation applies. Appropriators put limits on mandatory programs by using language such as: "None of the funds appropriated or otherwise made available by this or any other Act shall be used to pay the salaries and expenses of personnel to carry out section [ ... ] of Public Law [ ... ] in excess of $[ ... ]." Table 1 lists the CHIMPS in agricultural programs that Congress has enacted since FY2003 in appropriations acts. The practice peaked in FY2006, and subsequent changes have been smaller. The CHIMPS in Table 1 total $7.5 billion over the eight years from FY2003 through FY2010. Much of that amount is from the two years FY2005 and FY2006, when CHIMPS were more than double the amounts in other recent years. CHIMPS in eight conservation programs are among the most notable, accounting for $3 billion of the $7.5 billion total over eight years. Among individual programs, the Environmental Quality Incentives Program (EQIP) has the highest multiyear total, $1.2 billion over eight years. In addition to the CHIMPS that appropriators place in regular annual appropriations bills, authorizing committees sometimes reduce mandatory program authorizations to create offsets for new spending on other agricultural purposes, such as disaster assistance or child nutrition. When authorizers reduce mandatory spending, they change the authorizing law (e.g., the farm bill) directly. Table 2 lists the reductions to mandatory programs that Congress has enacted since 2003--not as part of a farm bill, but via budget reconciliation and other required offsets. The Conservation Security Program was reduced by $3.1 billion in FY2003 and $2.9 billion in FY2005 to create offsets for agricultural disaster assistance (each were 10-year reductions). In the 109 th Congress, the Agriculture Committees were compelled to find savings for budget reconciliation. In that reconciliation, authorizers cut $2.7 billion of mandatory funding over five years, from many of the same conservation, rural development, and research programs that had been the subject of CHIMPS in prior years. In doing so, the authorizing committees captured the savings for reconciliation, preempting similar action in future appropriations acts. More recently, a funding proposal for the Senate Agriculture Committee's Healthy, Hunger-Free Kids Act of 2010 ( S. 3307 ) proposes to reduce EQIP by $2.2 billion over 10 years to offset the cost of increases to the child nutrition program. Some of the support for this action rests on recognition that appropriators have already been limiting EQIP (this is discussed further in the example, " A Reduction by Authorizers: Proposed EQIP Offset for Nutrition "). The Administration also can take actions that reduce mandatory outlays, and these actions may affect the budget baseline. For example, USDA's negotiation with crop insurance companies over the Standard Reinsurance Agreement (SRA) proposes to reduce some payments, something USDA can do administratively within the scope of the authorizing legislation. Budgetary savings in the range of $6-$8 billion over 10 years were proposed initially. How these cuts are achieved--whether administratively through the SRA or legislatively through congressional action--has been a topic of debate. This is discussed later near the end of the section on " Budget Scorekeeping and Baseline Issues ." The baseline for a government program is a projection at a particular point in time of what the multiyear federal spending (budget authority or outlays) would be under current law if no policy changes were made. The baseline serves as a benchmark or starting point for future budget analyses. Whenever new provisions (such as in a farm bill, or CHIMPS in an appropriations bill) are introduced that affect federal mandatory spending, their impact (or "score") is measured as a difference from the baseline. Any increase in costs above the baseline level may be subject to certain budget constraints (such as pay-go). The process of scorekeeping and estimating baselines is done in Congress by the Congressional Budget Office (CBO), acting under the supervision of the House and Senate Budget Committees. The method or impact of calculating the budgetary savings from reducing mandatory programs can sometimes raise questions. For example, how much credit can or should appropriators get for limiting a program by using CHIMPS? What does a reduction by authorizers (or the Administration) do to the baseline level of funding that is available for a program? When mandatory funds are made available for only one fiscal year, the scorekeeping from a reduction is straightforward. The savings are equal to the limit placed on the program in relation to the full funding level in the authorizing act. Other mandatory funding is made available using "no year" money; that is, the mandatory funding is "to remain available until expended" (the funding is not limited to a single fiscal year). When appropriators block this type of mandatory funding in one year by using CHIMPS, they typically are not cancelling the authority to obligate funds in future years; therefore the funding is still available and could be used in a future fiscal year. Under CBO scoring procedures, appropriations acts in successive years can get credit for limiting the same pool of funding so long as the underlying "no year" funding authority remains available. Thus, what some might call an overstatement of budget savings can occur. For example, suppose a program has a $50 million mandatory authorization to remain available until expended. It can be blocked by $50 million in CHIMPS in one year and another $50 million in CHIMPS the following year. Over two years, $100 million in CHIMPS could be credited from this $50 million program. The next section has a specific example, " CHIMPS by Appropriators: The Dam Rehabilitation Program ." The method of calculating budgetary savings when authorizers make the reduction is somewhat more straightforward since it is a direct change in the authorizing law. However, because the authorizing law is changed, a reduction affects the budget for future legislation (such as a future farm bill) by reducing the budget baseline. As with many legislative developments, a farm bill debate is influenced by budgetary constraints imposed by Congress. The baseline establishes how much money authorizers have available to spend on a bill without having to seek offsets elsewhere. The calculation of a baseline assumes a continuation of current policies under expected economic conditions. Therefore, any reduction in existing program funding affects the baseline estimates for future years. As a mandatory program's budget authority is reduced, savings are generated by the difference between the previous authority and the new level. This reduction is usually not annual, like CHIMPS, but rather long-term (a 5- or 10-year budget window). It therefore affects the program's overall baseline. For example, if an authorizing act provides (or CBO estimates that a program will cost) $100 million each year for a 5-year farm bill, then the baseline for the program is $100 million each year. This baseline may likely extend beyond the life of the farm bill for an entire 10-year budget window. If the authorization for the program is reduced to $85 million each year, then the baseline is reduced by $15 million each year to $85 million (and the sum across a 10-year budget window from the $15 million/year reductions could result in $150 million of budget savings). In addition to Congress taking action to reduce spending, the Administration sometimes can make changes that reduce mandatory outlays and these actions may affect the baseline. For example, USDA periodically negotiates a Standard Reinsurance Agreement (SRA) with the private insurance companies participating in the federal crop insurance program. The current SRA negotiation proposes to reduce various payments to crop insurance companies for delivering the program to farmers, something USDA can do administratively within the scope of the authorizing legislation. Generally speaking, there is some support or at least recognition that a reduction in crop insurance delivery costs is needed. Budgetary savings in the range of $6-$8 billion over 10 years initially were proposed. How such cuts are achieved--whether administratively through the SRA or legislatively through congressional action--has been a topic of debate. Given the possibility of budget reconciliation in the next few years because of federal deficits, and the upcoming debate for a 2012 farm bill, leaders in the agriculture community do not want USDA to make such changes administratively because Congress would not get credit for the reduction. They would prefer to preserve the baseline and let Congress make any cuts. If action waits until a future farm bill, the Agriculture Committees could make similar reductions in crop insurance and be able to use the savings to offset other programs elsewhere in the farm bill--funds that would not be available if USDA makes cuts administratively. Alternatively, if budget reconciliation is used in the foreseeable future, these types of reductions to crop insurance might be one of the first choices to reduce outlays to help meet reconciliation targets, before reducing spending on other commodity or conservation programs. The Small Watershed Rehabilitation Program (a.k.a. the Dam Rehabilitation Program) is an example of CHIMPS that illustrates the potential for what some argue is double counting. It also is one of the few CHIMPS remaining in FY2010 (the second row of Table 1 ). During two periods, FY2003-FY2006 and FY2007-FY2010 (i.e., before and after budget reconciliation in February 2006), it reveals two types of double counting. Although appropriators did provide some discretionary funds during these same periods, they did not replace the level of the mandatory reductions. First, the 2002 farm bill authorized the Small Watershed Rehabilitation Program mandatory funding from the CCC as follows: $45 million in FY2003, $50 million in FY2004, $55 million in FY2005, $60 million in FY2006, and $65 million in FY2007--with each year's funds to remain available until expended. Using CHIMPS to block mandatory spending in the program, appropriators were given credit for $45 million in savings in FY2003, $95 million in FY2004 ($45 million carryover from FY2003 plus $50 million from FY2004), $150 million in FY2005 ($95 million carryover from FY2003-04 plus $55 million from FY2005), and $210 million in FY2006 ($150 million carryover from FY2003-FY2005 plus $60 million in FY2006). Thus, over four years, appropriators were given credit for a total of $500 million in savings from $210 million in mandatory authorizations, and used it to offset discretionary programs elsewhere in the annual Agriculture appropriations acts (see Table 3 , part 1). Next, to comply with budget reconciliation directives included in the FY2006 budget resolution ( H.Con.Res. 95 ), which resulted in the Deficit Reduction Act of 2005 ( P.L. 109-171 ), the Agriculture Committees cancelled the unobligated budget authority for the Dam Rehabilitation Program for FY2003-FY2006. They did, however, allow the $65 million for FY2007 to remain available until expended, as in the original 2002 farm bill. In addition, the 2008 farm bill authorized an additional $100 million of mandatory funds in FY2009 to remain available until expended. Continuing to use CHIMPS on the remaining and new amounts provided for the Dam Rehabilitation Program, appropriators were given credit for $65 million in savings in each of the FY2007 and FY2008 Agriculture appropriations bills, and $165 million in savings in each of the FY2009 and FY2010 bills (see Table 3 , part 2). Thus, in the four years from FY2007 through FY2010, appropriators were given credit for a total of $460 million in savings from $165 million in mandatory funds. On March 24, 2010, the Senate Committee on Agriculture, Nutrition, and Forestry marked up the Healthy, Hunger-Free Kids Act of 2010 ( S. 3307 ). The bill would reauthorize many of the USDA child nutrition programs and increase total funding by $4.5 billion over the next 10 years. To help offset the new spending, the bill includes a proposed reduction to the Environmental Quality Incentives Program (EQIP). Section 442 of the bill would reduce the mandatory budget authority for EQIP to $1.477 billion in FY2011 (currently at $1.588 billion in FY2011 under the 2008 farm bill) and $1.477 billion in FY2012 (currently at $1.75 billion in FY2012 under the 2008 farm bill). Under the CBO baseline, this reduction yields an estimated savings of $2.2 billion over 10 years. Much of the concern during the Agriculture Committee markup of the child nutrition bill appeared to revolve around the proposed reduction of EQIP funding to offset the bill's increases for child nutrition. Supporters of the offset point to the reduction as a way for the authorizing committee to do what the appropriators have been doing for years and use the offsets elsewhere for their own purposes. Others counter that a reduction of EQIP's funding authority--while still allowing an increase over previously appropriated levels--will not make the program immune from further cuts by appropriators. Some also point to the impact that a reduction will have in determining baseline funding for future farm bill debates. The popularity of EQIP and its backlog of unfunded applications have been cited as reasons not to reduce its funding authority but rather to look to other mandatory programs for possible offsets. An amendment by Senator Chambliss at the March 24, 2010, committee markup proposed to reduce authorized acres under the Conservation Stewardship Program (CSP) rather than EQIP. The amendment received support from both political parties; however, it failed to pass by a margin of one vote (10-11). Opponents of the amendment said that a reduction in CSP could reduce a future farm bill baseline more than the proposed reduction to EQIP. As this bill moves to the floor, additional debate on offset alternatives is expected. Some programs have been a source of reductions for both appropriators and authorizers. For example, the Conservation Security Program (CSP) was used by authorizers to offset two agricultural disaster assistance laws in 2003 and 2005, and again in budget reconciliation in FY2005. During this same period, appropriators both restored the funding that authorizers used for the first disaster bill, and reduced CSP through CHIMPS in FY2004-FY2007. First, CSP was created in the 2002 farm bill ( P.L. 107-171 , Sec. 2001). When enacted, it did not have a maximum enrollment limit or a cap on total funding. In March 2003, CBO's baseline projection for the cost of CSP was $6.9 billion over 10 years. The Agricultural Assistance Act of 2003 ( P.L. 108-7 , Division N)--a disaster assistance bill for crop and livestock growers--placed a limitation on CSP enrollment; that is, a it placed a cap on CSP that had not existed. This limitation resulted in a $3.1 billion reduction in CSP's estimated outlays over a 10-year period, and provided $3.1 billion to offset the cost of disaster assistance. The next year, the FY2004 appropriations bill ( P.L. 108-199 ) eliminated the cap that had been placed on the program in FY2003. This restored CSP's full funding. However, because appropriators have responsibility for only the single year of the appropriation, and because the former limitation on CSP was estimated to have budget effects only after 2007, only the one-year cost of the restoration (which was $0 in FY2004) was charged to the appropriation. But the effect was to increase the 10-year baseline projection by the $3.1 billion former offset. Later in 2004, the Emergency Supplemental Appropriations for Hurricane Disasters Assistance Act of 2005 ( P.L. 108-324 , Division B)--providing disaster assistance for crop and livestock growers--placed another cap on CSP that offset $2.9 billion of additional disaster assistance. In FY2005, CSP was one of 12 agricultural programs reduced by authorizers to meet budget reconciliation directives ( P.L. 109-171 , Sec. 1202). Its $649 million reduction was the largest reduction among the four conservation programs that were affected by reconciliation, and the second-largest among the entire group ( Table 2 ). Finally, each of the FY2004-FY2007 annual agriculture appropriations bills used CHIMPS to reduce the annual amount available for CSP. These reductions ranged from $12 million in FY2004 to $115 million in FY2007 ( Table 1 ). The Conservation Security Program was terminated in the 2008 farm bill ( P.L. 110-246 , Sec. 2301) and replaced by the Conservation Stewardship Program. Presently, funding for the new CSP has not been reduced by appropriators or authorizers. The tension between agriculture appropriations and authorizing committees over which committee is responsible for bringing final spending recommendations to the floor for certain mandatory agricultural programs (such as conservation) is not likely to wane. Nonetheless, it is Congress as a whole that makes the final decision by either endorsing or changing a committee's recommendations on the floor. Appropriators assert that many of these relatively new programs, like most other funding decisions, should rest with them and be discretionary in the annual appropriations process. Authorizers contend that a consistent funding stream is preferable for some programs and want to use the mandatory funds at their discretion, especially since they assert appropriators have not always funded the authorizers' priorities adequately. Beyond the jurisdictional tension, the budgetary effects of CHIMPS and other budget reductions are not always straightforward. For example, A multiyear total of CHIMPS by appropriators can exceed the mandatory funds made available for the program in the authorizing legislation. With enough foresight, CHIMPS can reduce the discretionary budget allocation that is needed for an appropriations subcommittee to fund its programs. A lower discretionary allocation to one subcommittee that uses CHIMPS potentially allows other subcommittees to receive a higher allocation. Reductions in mandatory programs by authorizing committees can affect future farm bill baselines. The Administration can take actions with mandatory programs that affect baselines, and this can put it at odds with Congress not only over policy implementation but also over the budget. These types of funding issues are increasingly important in an era of budget deficits and the potential for budget reconciliation. Because of the federal budget deficit, many people argue that the next farm bill is very unlikely to receive additional funds from outside the Agriculture Committees' jurisdiction to increase program spending. Thus, preserving the existing baseline is a high priority for many in Congress and affiliated agricultural, conservation, and rural development interest groups in order to maximize the resources available to write a new farm bill.

Many agricultural programs receive mandatory funding through the U.S. Department of Agriculture's Commodity Credit Corporation (CCC). Mandatory funding is made available by multiyear authorizing legislation and does not require annual appropriations or subsequent action by Congress. However, mandatory funding can be reduced in the appropriations process or by the authorizing committees themselves. In contrast to mandatory funding, discretionary funding is made available by annual appropriations acts on a year-by-year basis through a different process originating in the appropriations committees. While mandatory spending in agriculture historically was reserved for the farm commodity programs, the authorizing Agriculture Committees have expanded its use to conservation, rural development, and energy programs in the recent farm bills passed by Congress. Mandatory spending creates funding stability and consistency compared to that of the appropriations process. Some argue, however, that this use of mandatory spending has moved beyond the statutory purpose of the CCC. This has created tension between authorizers and appropriators, leading to actions by appropriators that are called "changes in mandatory program spending" (CHIMPS). CHIMPS usually reduce or block mandatory outlays, but sometimes appropriators replace some of the blocked funding with discretionary appropriations. Nonetheless, CHIMPS generate savings that appropriators can use to offset increases in discretionary spending. Between FY2003 and FY2010, CHIMPS by appropriators to mandatory agricultural programs have totaled $7.5 billion. CHIMPS to eight conservation programs are among the most notable, accounting for $3 billion of this total. Among individual programs, the Environmental Quality Incentives Program (EQIP) has the highest multiyear total of CHIMPS, at $1.2 billion. Authorizing committees also have reduced mandatory program spending to generate savings after a farm bill has been enacted. The reason may be to offset spending increases for other programs within their jurisdiction or to comply with budget reconciliation directives. Notable among changes to authorizing laws (not CHIMPS), the Conservation Security Program was reduced in FY2003 and again in FY2005 to offset agricultural disaster assistance ($3.1 billion and $2.9 billion, respectively). Authorizers also received credit for $2.7 billion in budget reconciliation savings (over five years) across 12 programs in 2005, many of which had been reduced by appropriators in prior years through CHIMPS. More recently, the Senate Agriculture Committee's current funding plan for the Healthy, Hunger-Free Kids Act of 2010 (S. 3307) proposes to use $2.2 billion of reductions from EQIP over 10 years to offset the cost of increases for child nutrition. A proposed alternative to use an offset from the Conservation Stewardship Program (CSP) would have similar budgetary effects, and would likewise affect a mandatory program. The Administration also can take actions that reduce mandatory outlays. In renegotiating the Standard Reinsurance Agreement for the crop insurance program, the Administration has proposed changes that would reduce the baseline available for crop insurance by about $7-8 billion over 10 years. This has raised a debate over whether such reductions should wait so that Congress can get credit for any reduction, especially for future farm bills or possible budget reconciliation.

This report provides current and historical labor force information about young people ages 16 to 24. In general, youth have a lower rate of labor force participation, and those who are in the labor force are less likely to gain employment than older workers. Both labor supply and demand factors drive this pattern. On the labor supply side, young people are making greater investments in education by enrolling in and completing high school and college in greater numbers. They are less likely to be attached to the labor force due to their limited availability (e.g., only able to work full-time during the summer if they attend school) and their relatively weaker connections to employers. Labor demand also plays a role. Youth are less desirable in some ways than adult workers because they are less experienced; have fewer skills and education; and are potentially short-term hires, which can be costly to employers. The report focuses on trends from 2000 to 2018. This period has included two recessions (March to November 2001 and December 2007 to June 2009) and a decline in jobs requiring only a high school diploma. Many workers were still struggling to find work in the years immediately following the more recent recession. The recession exacerbated challenges that workers have faced in securing and retaining employment since 2000. Against this backdrop, young people ages 16 to 24 experienced their steepest decreases in labor force participation and employment; however, in recent years employment levels have steadily been recovering. Some studies have found that early labor market experiences and outcomes have lasting impacts on employability and wages. Given the current and future challenges that young people can experience in the labor market, this report may be of interest to Congress in the contexts of workforce development, education, unemployment insurance, youth policy, or macroeconomic policy; however, the report does not discuss specific programs or policy implications. The report begins with a brief discussion of current employment and education pathways that young people can pursue. Following this is a description of the labor market data used in the report, which includes the labor force participation rate, employment-population ratio, and unemployment rate. The report then discusses these data for the post-World War II period, with a focus on trends since 2000, comparing labor force outcomes based on age, sex, and race/ethnicity. The report concludes by exploring the factors that influence the extent to which youth participate in the labor force and their prospects for employment. The last section also discusses the potential short- and long-term effects of young people's labor market experiences. The Appendix includes supplemental tables and figures on youth employment trends. Declines in the shares of young people participating and working in the labor force is probably due, in part, to growing enrollment in high school and postsecondary education, which is likely a result of a growing need for higher levels of educational attainment to secure employment. The Department of Labor's (DOL's) Bureau of Labor Statistics (BLS), which measures labor market activity, predicts that the fastest growing occupations between 2016 and 2026 will require some postsecondary education. For the purposes of this report , youth refers to young people ages 16 through 24. Individuals as young as 16 are included because BLS counts workers beginning at this age. Although traditional definitions of youth have considered adolescence to be a period ending at age 18, cultural and economic shifts have protracted the time for youth to transition to adulthood. The current move from adolescence to adulthood has become longer and more complex, and policymakers and others are recognizing that adolescence is no longer a finite period that ends at the age of majority. Older youth, up to age 24, are included because they are often still in school and/or living with their parents. Young people ages 16 through 24 may pursue a variety of education and employment pathways. Those of high school age may attend high school and/or work. Youth with a high school diploma can attend a two- or four-year college, enlist in the armed services, or secure part-time or full-time employment. Some youth work and attend school simultaneously, while others alternate between work and school (e.g., summer jobs). Young people who drop out of high school can do some of these same things, but their opportunities are more limited. They cannot enroll in a four-year college or, in most cases, enlist in the military. They may also face challenges securing employment. Even young people who are attending high school or an institution of higher education (or those on a break from school) may still want to work, or feel that they have to work, for a variety of reasons--to have spending cash, contribute to their household income, gain work experience, and save for the future, among other possibilities. A nationally representative survey in 2015 found that the majority (61%) of young adults ages 18 to 30 in the labor market are optimistic about future job opportunities. This optimism had increased since the previous survey in 2013 (45%). Further, the 2015 survey found that young adults have a strong preference for steady employment over higher pay, though this has declined somewhat since 2013 (62% in 2015 versus 67% in 2013 for steady employment; and 36% in 2015 versus 30% in 2013 for higher pay). This section describes data on participation in the labor force, including how it applies to youth. The data are reported by BLS based on a household survey conducted by the Census Bureau. This survey, known as the Current Population Survey (CPS), collects labor force and other data from a nationally representative sample of 60,000 households on a monthly basis. The survey includes households with civilian non-institutionalized individuals and excludes individuals residing in correctional facilities, residential nursing and mental health facilities, college dorms, military facilities, and other institutions. Employed and unemployed youth (beginning at age 16) and adults (no upper age limit) are counted by BLS as part of the labor force. The labor force participation rate is the percentage of individuals in the population who are employed and who are unemployed ( Labor Force Participa tion Rate = Employed + Unemployed Individuals/Civilian Population Age 16+ ) . BLS considers individuals to be employed if they work at all for pay or profit during the week that they are surveyed. This includes all part-time and temporary work, as well as regular full-time, year-round employment. It does not include unpaid internships. Individuals are considered unemployed if they are jobless, actively looking for jobs, and available for work. Job search activities include sending out resumes or filling out applications, among certain other activities. The employment-population r atio is the proportion of individuals in the non-institutionalized U.S. population who are employed ( Employment to Population Ratio = Employed Individuals/Civilian Non-institutionalized Population ). The unemployment rate is the share of individuals in the labor force who are unemployed ( Unemployment Rate = Unemployed Individuals/Labor Force ). Labor force participation measures the extent to which individuals are engaged in or actively seeking work, and for this reason has been used as a proxy indicator of interest in working. Generally, increasing labor force participation indicates greater interest in working, while decreasing labor force participation indicates declining or noninterest in working. Changes in labor force participation rates, however, are not perfect indicators of individual or collective preference about work. For example, labor force participation may decline because individuals become discouraged about job prospects and give up looking for work. Individuals may also decide to pursue education instead of work to improve future job prospects. The employment-population ratio and the unemployment rate can help to gauge market conditions. When the employment-population ratio rises, it means that a larger percentage of the working-age population is employed. The unemployment rate is also an indicator of whether individuals are able to be employed in the labor force. This rate should be interpreted with caution: changes in the unemployment rate can mask the extent to which individuals want to work. The unemployment rate can fall without a corresponding rise in employment if unemployed workers leave the labor force. The figures and tables in this section and the Appendix display labor force data over the period following World War II (starting in 1948, when the data first became available) based on age, sex, and race/ethnicity. The figures also plot the 11 periods when the country was in recession. Table A-1 , Table A-2 , Figure A-1 , and Figure A-2 in the Appendix show broader labor force trend data for teens and young adults, respectively, from 1948 through 2017. The labor market experiences of youth are different based on their age. Figure 1 charts the employment-population ratio from 1948 through 2017 for teens (ages 16 to 19), young adults (ages 20 to 24), and "prime-age" individuals (ages 25 to 54). Over that time, teens had the lowest employment-population ratios, followed by young adults. From the 1950s through the 1970s, the prime-age adults' and young adults' employment-population ratios moved in the same direction, declining in the 1950s and then increasing in the 1960s and 1970s. The difference in their employment-population ratios began to grow beyond that period, reaching nearly 13 percentage points in 2017. Figure 1 also illustrates the cyclical nature of the employment-population ratio, particularly for teens. The teen employment-population ratio had a greater decline soon after the start of a recession compared to the ratios for young adults and prime-age adults. Further, the employment-population ratio for young adults generally exhibited a more upward trajectory. This is due, in part, to young adult females entering the labor market in greater numbers starting in the 1960s. The employment-population ratios for both teens and young adults dipped from 2000 to 2010 (capturing the effects of two recessions), but more dramatically for teens (a 33% versus 9% decline). The indicators for both age groups began recovering following the 2007 to 2009 recession, with greater gains in the labor force participation rate and employment-population ratio for teens (see Table A-1 and Table A-2 in the Appendix ). Figure A-1 and Figure A-2 show that the labor force participation rate trend lines for teens and young adults were generally parallel, and were higher than the employment-population ratio trend lines. The trend lines for the unemployment rates for both groups generally mirrored changes in the employment-population ratios. The post-2000 declines in the employment-population ratios and labor force participation rates, particularly for teens, can likely be viewed as partially a consequence of a positive social trend--the increase in high school and college enrollment. In addition, as discussed later in the report, students are increasingly pursuing unpaid internships to meet high school graduation requirements and improve their prospects for attending college. So although they are gaining experience that will likely benefit them when they work, they are not included in the labor force. Nonetheless, these indicators do not necessarily reflect a tendency toward voluntary withdrawal from the workforce to complete schooling. Some young people may have dropped out of the labor market because of dimmed employment prospects in light of the need for more schooling to obtain a job. Figure 2 plots the employment-population ratios for female and male teens and young adults for 1948 through 2017, revealing different levels and patterns of change. For many years, the employment-population ratios for females were much lower than they were for their male counterparts. The difference in the employment-population ratios for males and females in both age groups began to narrow in the 1990s, but likely for different reasons. For teens, the male employment-population ratios started to drop while the female employment-population ratios began to rise, so that by 1996 the rates were nearly identical. This may be attributable to the changing employment prospects of individuals with lower levels of education, as discussed in a subsequent section. Young males ages 16 through 24 are somewhat less likely to be enrolled in high school or college than their female counterparts, and a smaller share of males ages 25 through 29 have obtained a college degree. With regard to young adults, females made significant inroads into the labor market. The employment-population ratios for young adult women generally began to trend upward in the 1960s through the 1980s. This corresponds with an upward trend in college completion among women, which likely influenced the extent to which they pursued and secured employment. In addition, other factors--lower fertility, declines in marriage rates, and increased likelihood of divorce--have played a role in women's increased participation in the labor force, among other factors that are not easy to quantify (e.g., shifts in expectations about roles based on sex). From approximately 2000 onward, the employment-population ratios for females and males became more similar; however, the employment-population ratios for young adult males have been higher in each year. Figure 3 and Figure 4 compare the employment-population ratios of teens and young adults by race and Hispanic ethnicity from 1972 to 2017. The Congressional Research Service (CRS) applies Census definitions in this section, which divide race into black, white, or Asian and ethnic origin into Hispanic or non-Hispanic. People of Hispanic origin may be of any race. BLS began recording employment data for black individuals in 1972, for Hispanic individuals in 1994, and for Asian individuals in 2000. Both figures indicate that employment-population ratios were highest over time for white youth, followed by Hispanic youth. Black and Asian youth had similarly low employment-population ratios relative to their white and Hispanic counterparts. As shown in Figure 3 , the employment trends for white, black, and Hispanic teens generally reflected the cyclical effects of the economy until the late 1990s. The employment-population ratios for all groups subsequently decreased in most years through 2012 (give or take a year, depending on the racial/ethnic group). The employment gap between white teens and black teens narrowed, from about 20 percentage points in 2000 to 10 percentage points in 2017, due primarily to decreases in the employment-population ratio for white teens. Figure 4 indicates that employment for white young adults steadily increased, even following most recessions, over the period examined. Hispanic and black young adults made inroads in the labor market since the most recent recession (2007-2009), such that Hispanic youth had similar employment-population ratios to white youth and the employment-population ratio for black young adults reached an all-time high of 61% in 2017 (similar, but still higher, to levels in the late 1990s). The employment-population ratio for Asian young adults has generally been in decline over time, and hovered near 50% during the most recent post-recession period. Despite recent improvements in employment among minority youth, they have had lower employment-population ratios relative to white youth. These lower rates may be due, in part, to the reduced employment prospects of individuals with less education and other factors that are more difficult to measure, such as poverty and neighborhood characteristics (see discussion at the end of the report). Black and Hispanic youth ages 16 to 24 are less likely to have completed high school and college (see Table A-3 ). Schooling may also explain the relatively low employment-population ratios for Asian youth, but for a different reason. Asian youth are delaying entry into the labor market and may be foregoing work for school while in the labor force. Asian youth have had the highest rates of college completion among any racial or ethnic group (and rates of high school completion that are comparable to that of white youth). The role of education for Hispanic youth is less clear. While their employment-population ratio has been closer to that of white youth in recent years, Hispanic youth had relatively lower rates of high school completion and slightly higher rates of college completion than white youth. Table 1 provides labor force data for individuals ages 16 and older by age groups--16 to 19 (teens), 20 to 24 (young adults), and older working-age groups--in 2017. The table shows that for these workers generally, the labor force participation rate was 62.9% and the unemployment rate was 4.4%. In addition, 60.1% of individuals in the working population overall were employed. Though not shown in the table, these figures represent improvements from 2014, which were included in the last update to this report. Except for the oldest workers, teens are less likely than other age groups to participate in the labor force. Teens that do participate are less likely than other groups to find work (i.e., they have higher unemployment). In 2017, teens had the second lowest rate of labor force participation, after the oldest workers (ages 65 to 69); the lowest employment-population ratio; and the highest rate of unemployment. While young adults participated at a high rate in the labor force and about two out of three were working, they also had a higher rate of unemployment relative to the overall unemployment rate. As discussed in a subsequent section, these trends are consistent with factors that influence labor force outcomes. In general, firms are more likely to hire workers with more experience and availability. Young people tend to have less experience and also may be less likely to be in the labor force because of their participation in school. Table 2 displays youth labor force data for young people ages 16 to 24 by sex, race, and Hispanic ethnicity in four years: 2000, 2007, 2014, and 2017. These four years are notable because they include the start of a period with long-term changes in labor market outcomes for youth (2000), a period just before the start of the December 2007 to June 2009 recession (2007), and two recent full years after the recession ended (2014 and 2017). Labor force trends for these youth were on a downward trajectory before the onset of the recession. The table shows that youth labor force participation rates and the youth employment-population ratio in 2017 were generally lower than in 2000 and 2007; however, the youth unemployment rate was about the same, at 9%, in both 2000 and 2017, suggesting that young people gained some footing in the labor market following the recession. The table also shows the following trends: Both females and males ages 16 to 24 experienced sharp decreases in their labor force participation rate and employment-population ratios from 2000 to 2017. A slightly greater share of males had withdrawn from the labor market over the period, such that labor force participation rates were somewhat comparable for both females (54.3%) and males (56.6%) by 2017. Employment-population ratios were about the same in 2017 for males and females (50%), but males experienced a greater decline since 2000. The unemployment rate ticked up from 2000 to 2017 for male youth, and declined slightly for female youth. Labor force participation and employment-population ratios for all racial and Hispanic ethnic groups decreased from 2000 to 2017. Black and Asian youth were less likely than white and Hispanic youth to be employed, but their relatively low employment rates had different drivers. Black youth were more likely to participate in the labor force but were less successful at finding jobs, as shown in their higher rates of unemployment. Asian youth were somewhat less likely to participate but had greater success in finding employment, as shown in their lower rates of unemployment (which were comparable to white youth). The changes in youth labor force participation rates and labor force outcomes from 2014 to 2017 reflected overall improvements in the economy. There was a slight increase in labor force participation for all subgroups except white and Hispanic youth, whose participation rates remained constant. The employment-population ratio increased for all subgroups, and jumped by nearly 16% for black youth. Unemployment rates declined for all subgroups. Black youth unemployment dropped most significantly, but was still higher than other groups at 14.6%. The first two tables in the Appendix display this same labor force data for youth, as breakouts for teens ages 16 to 19 ( Table A-1 ) and young adults ages 20 to 24 ( Table A-2 ). From 2000 to 2017, teens saw striking declines in their labor force participation (-17%) and employment-population ratios (-15%) compared to young adults (-7% and -6%, respectively). However, the unemployment rates for teens were similar in 2000 (13.1%) and 2017 (14%), and about the same for young adults (around 7%) in these two years. Still, the unemployment rates for both groups declined by about 30% since 2014. The labor force situation has generally been improving for youth since the last recession ended in June 2009. Nonetheless, their employment-population ratios have only recently recovered to pre-recession levels. Multiple variables likely affect labor market outcomes for youth. This section provides a brief summary of some of these factors. One major factor is that youth have less education and experience relative to older workers. In general, firms are more likely to hire workers with greater experience. Youth may also face increased competition for jobs that require less education. Further, a growing number of young people are enrolled in school, particularly post-secondary education, and therefore may be out of the labor force. Teens are especially likely to report that they are not in the labor force because they are attending school. As with experience, firms are more likely to hire workers with greater availability. Labor is a "derived demand," meaning firms hire and retain workers to produce goods and deliver services sought by consumers. The overall health of the economy is a predictor of whether individuals seeking jobs or who have jobs, including youth, are able to secure and maintain employment. In other words, when demand is greater for goods and services, employers generally have a greater demand for workers. In the latest recession, the decline in economic activity (as measured by gross domestic product, or GDP) bottomed out in the second half of 2009. Since this time, the labor market has been recovering, albeit at a relatively slow pace. The Congressional Budget Office (CBO) projected that increases in GDP from 2017 through 2027 are expected to remain modest, primarily because of a slow increase in the size of the labor force. As noted, firms are generally more likely to hire workers with greater experience and availability, which puts young workers at a disadvantage. Young workers may especially face challenges in landing a job during difficult economic times. Some analyses have found that the rising premium on education could be linked to a decrease in demand for some adult workers with less education. In turn, this decrease can lead to greater competition between adults and young people looking for work. In addition, adult immigrants with lower levels of education may contribute to this increased competition. How immigration affects labor markets is a large and complex area of economic research, and economic theory produces a range of possible outcomes that depend on multiple factors. Education likely also plays a role in whether youth seek and are able to find work. Youth may decide not to pursue employment and to attend school instead; or they may want to do both, but may not have as many job options without adequate levels of education. A growing share of young people is attending school. A Federal Reserve Bank analysis shows that school attendance for 16-to-24 year olds without a high school diploma increased from 38% in 1998 to 60% in 2014, and that this upward trend has been driven by youth ages 16 to 19. Figure 5 shows the rates of enrollment in higher education among youth ages 18 to 19 and 20 to 24. The figure indicates that these rates steadily increased over time, reaching an all-time high in 2010 (51%) for teens and in 2012 (40%) for young adults. From 1970 to 2015, the rate of teen attendance in higher education increased by about 30%. The slight decline in attendance in higher education for teens, from the 2010 peak to about 50% in 2015, may be due to improved prospects in the labor market and other factors, such as the rising cost of public higher education. About 40% of young adults were enrolled in higher education in 2015, compared to about 20% in 1970. School attendance and the intensity of educational activities likely plays a role in the downward trend in the labor market participation rate for teens and young adults. A BLS analysis indicates that 9 out of 10 teens ages 16 to 19 cited school attendance as the main reason for not being in the workforce in 2014. Teens attending school were also much less likely to work than in previous years. The BLS study further indicated that teens appear to face greater academic demands and pressure, which may influence their education and labor force choices. The study noted that participation in educational activities takes up a larger amount of time in a young person's day than ever before. Further, more high school students are satisfying the requirements needed for attending a four-year college, and a growing share of students are taking coursework to prepare them for college: about 10% of students took such coursework in 1982, compared to nearly 50% in 2000 and almost 62% in 2009. Increases in school attendance and related school activities suggest that young people are foregoing work to instead pursue education because of the gains they can make in the labor market at a later time--although the extent to which this occurs is uncertain because of data and survey limitations. However, a large body of research documents favorable labor force outcomes for individuals with a bachelor's degree or higher, which likely accounts for such decisionmaking. Success in the workforce is related to education, with the payoff being lower unemployment and higher wages as educational attainment increases. Figure 6 shows the unemployment rates and median weekly earnings for full-time workers ages 25 and older in 2017. Generally, as the level of education rises, the unemployment rate decreases and median weekly earnings increase. Among adults with a high school degree, for example, 4.6% were unemployed and earnings were $712 per week. This is compared to an unemployment rate of 2.5% and nearly $1,200 in weekly earnings for college graduates. Workers with higher levels of education are more likely to weather hard economic times. According to a 2010 analysis, in the past two recessions "the typical job loser was a high school-educated male in a blue collar job, such as manufacturing or construction, working in the middle of the country. In the past two recoveries, the typical job gainer was a female with a postsecondary education who lived on either coast and worked in a service occupation--particularly healthcare, education, or business services." A growing number of young people have obtained a college degree, which is likely attributable to the widely held belief that higher education leads to favorable returns in employment. Table A-3 in the Appendix shows the share of young people ages 25 to 29 who have completed high school or college in three selected years: 2000, when the economy was expanding but youth employment was beginning a long-term decline; 2007, immediately before the start of the December 2007 to June 2009 recession; and 2016, the most recent full year after the recession for which data are available. Data are also shown for racial and ethnic groups, except Asian youth in 2000. From 2000 to 2016, females and males made the same gains in high school completion but females were much more likely to have attained a college degree. In 2016, males and females were likely to complete high school at almost the same rate (93% for females and 91% for males); however, about 40% of females had completed at least a bachelor's degree before age 30, compared to about 33% of males. In almost every racial and ethnic category, females were more likely than males to graduate from high school and college in both 2000 and 2016 (about the same share of black males and black females completed high school). College completion rates generally rose over time across racial and ethnic groups, especially for Hispanic male and female young adults. Their rates of college completion nearly tripled from 2000 to 2016. Black female young adults also saw a sizable increase of nearly 50% over the period. In short, females and some minority youth, notably Hispanic youth and black female youth, have made educational gains since 2000. This may be one reason that labor market outcomes of females have been relatively better than those of their male counterparts. Over the 2000 to 2017 period (see Table 2 ), the employment-population ratio for females declined by nearly 8% compared to 11% for males. Additionally, the unemployment rate for females decreased while the unemployment rate for males increased. Minority youth also had smaller losses in labor force participation over this same period relative to white youth. The factors discussed thus far affect the labor market experiences of both youth and adults, although the effects tend to be more significant for youth. There are additional factors that may particularly influence youth outcomes in the labor market. Youth tend to have frequent movements in and out of the labor force. The educational calendar exacerbates the probability of unemployment for young labor force (re)entrants. They typically come into the labor market in May and June either searching for summer jobs after the school year has ended or seeking initial jobs upon graduating (or dropping out). While the regularly occurring swell in the labor supply of youth coincides with increased demand for workers in some seasonal industries, this is not the case for most firms in the economy. Characteristics of the neighborhoods in which youth live, such as area employment and poverty rates, and proximity of those neighborhoods to jobs, can also affect their labor status. Findings in this research area have been somewhat mixed. For example, an analysis found that certain neighborhood characteristics (higher rates of property crime, child abuse, and older housing stock) in one major metropolitan area were associated with higher rates of employment and more hours worked for low-income teens who lived in public housing; however, this association varied by sex, race, and ethnicity. Other research has found an association between better communities (e.g., less concentrated poverty, less income inequality, better schools) and better outcomes for children from poor families, including higher earnings as young adults. Further, the study found that the income gap between white and black young adults can be explained in some part by the differences in where they grow up. In addition, geographic isolation from fast-growing, job-rich areas (i.e., spatial mismatch) has been shown to affect youth employment outcomes. Some analyses estimated that limited proximity of jobs has a more adverse impact than access to transportation, and the proximity of jobs was found to affect the labor market involvement of youth independent of other factors. Geographic proximity to schools appears to influence decisions to attend college, and therefore may also lead to disparities in later job opportunities. Studies have shown a relationship between proximity to college and college attendance even when controlling for the characteristics of individuals and families who live near colleges versus those who live farther away. The effects of decreasing labor force participation and employment among youth have not been fully explored in the research literature. Some studies addressing these trends have focused on the individual outcomes for youth and not, for example, on societal or economic outcomes such as reduced GDP. The studies found that on average, early youth unemployment has serious negative effects on income but not as strong of effects on future unemployment. Other studies show that youth entering the labor force during a downturn in the economy have poorer labor market outcomes in the long run. These studies are discussed briefly below. Using data from the National Longitudinal Survey of Youth (NLSY), researchers estimated the long-term effects of youth unemployment on labor market outcomes. They examined the employment status of young men in the sample when they were in their 20s and nearly 10 years later. The study found that their average level of education and training increased over time, but also that early unemployment affected both wages and future unemployment. It projected that a six-month spell of unemployment at age 22 would result in a 2% to 3% lower wage rate in their early 30s. Other research has examined how young workers fare when entering the labor market during a weak economy. One study pooled data from the NLSY and other sources to estimate short- and medium-term effects of graduating from college during a recession at some point between 1974 and 2011. The study found that graduating during a recession reduced earnings, on average, by 10%. The loss of earnings persisted, with average earnings loss of 1.8% per year over the first 10 years. This decrease is driven in part by an inability to obtain hours of work and a loss in earning power. Other research has found that young people's experiences in the job market since 2000 have been less favorable than in prior years. An analysis by the Federal Reserve examined unemployment from 1990 through early 2013 for 22 to 27 year olds with at least a bachelor's degree. Its analysis found that securing employment tended to be more difficult for those just out of college at any point over this period. The study also found that unlike their earlier counterparts, a greater share of young people graduating from college since the early 2000s were working in low-wage jobs (e.g., bartender, food server) as opposed to other non-college jobs with higher wages (e.g., electrician, hygienist). This report provides an overview of the youth labor force situation. It shows that teens and young adults were withdrawing from the labor force over the time periods discussed, and those in the labor force were less likely to be employed than older workers. Several factors influence these trends. For example, school enrollment means less supply of young workers. The characteristics of young workers--their relative lack of work experience, lower levels of education, and frequent movement in and out of the labor force--also play a role. Perhaps most striking is that the employment-population ratio for youth, especially for teens, has eroded over the past decade--even in years when the economy was growing. The teen employment-population ratio has been below 40% in each year since 2002. This illustrates a decline in long-term employment ratios that began in the early 2000s, likely due, in part, to youth withdrawing from the labor force to pursue educational opportunities. While the employment-population ratio trend line for 20 to 24 year olds has been higher and more stable, the employment gains for this population have dipped since the early 2000s. Nonetheless, the employment-population ratio for young adults was higher in 2017 (about 66%) than it was in 1948 (about 60%). Additional research is needed on the effects of recent long-term youth unemployment. Such research could focus on how the current generation of young workers compares in terms of employment and wages to past generations of young workers who entered the labor force during downturns in the economy.

Congress has indicated a strong interest in ensuring that today's young people (ages 16 to 24) attain the education and employment experience necessary to make the transition to adulthood as skilled workers and taxpayers. This report provides context for Congress on trends in the labor force for youth. It discusses youth labor force data since 1948, with a focus on the period from 2000 to the present. The labor market experiences of youth ages 16 to 24 have varied based on their age and other factors. Over the post-World War II period, teens ages 16 to 19 generally have had a lower labor force participation rate and employment-population ratio than young adults ages 20 to 24. These two indicators for teens fluctuated from the 1950s through the 1990s, and then began a steady decline before stabilizing in recent years. The labor force participation rate and employment-population ratio for young adults was on an upward trajectory in most years following World War II. This was the result of increases in labor force participation and employment among young women. Both labor force measures declined for young adults in the 2000s. They have ticked back up in recent years, but remain below 2000 levels. Beginning in the early 2000s, young people ages 16 to 24 began to experience a more pronounced decline in their labor force participation rate and employment, along with a corresponding increase in unemployment. In 2000, they had a participation rate of nearly 66%, an employment-population ratio of about 60%, and an unemployment rate of 9%. These measures eroded even as the economy grew in the mid-2000s, and then declined further immediately following the recession. Although the labor force situation improved for young people in recent years, their labor force participation rate (56%) and employment-population ratio (50%) in 2017 were lower than in 2000, and their rate of unemployment was about the same (9%). Labor force indicators have trended differently for males and females ages 16 to 24. Beginning in the 1970s, the labor force participation rate and employment-population ratio for females increased as they entered the workforce in greater numbers. Labor force trends have also been distinct across racial and ethnic groups. Generally, the labor force participation rate and employment-population ratio have been highest for white youth, followed by Hispanic youth. Black and Asian youth have been the least likely to participate in the labor market or to be employed. The 2017 employment-population ratios for youth ages 16 to 24, by race and ethnicity, were as follows: white, 57%; Hispanic, 53%; black, 52%; and Asian, 42%. Black youth have experienced labor force gains in recent years. Education and other factors likely play a role in these labor market outcomes. Decreases in labor force participation and the employment-population ratios for young people appear to be due to a confluence of demand and supply factors. On the demand side, youth have less education and experience relative to older workers. Youth may also face increased competition for jobs that require less education. On the supply side, a growing number of young people are enrolled in school, particularly post-secondary education, and thus have competing demands on their time. Overall, firms are more likely to hire workers with greater experience and availability. The changes in the labor market landscape for youth have not been fully explored. Research in this area has hypothesized that reductions in human capital, such as deterioration of skills and foregone work experience, may have lasting impacts on the employability and wages of youth.

Congress passed the FY2018 Consolidated Appropriations Act on March 23, 2018 ( H.R. 1625 ). Both the House and Senate Appropriations Committees had reported Agriculture appropriations bills for FY2018 ( H.R. 3268 , S. 1603 ). The House also had passed a consolidated bill that included agriculture ( H.R. 3354 ). The full Senate did not consider the Agriculture appropriations bill on the floor. New, higher budget caps in the Bipartisan Budget Act of 2018 ( P.L. 115-123 ) facilitated the final appropriation. Specifically, the House Appropriations Committee passed H.R. 3268 on July 12, 2017, and the Senate Appropriations C ommittee passed S. 1603 on July 20, 2017. On September 14, the House passed an eight-bill consolidated appropriation, H.R. 3354 , with the Agriculture bill as Division B that included amendments to the House-reported version ( Table 1 , Figure 1 , Appendix B ). The discretionary total of the enacted Agriculture appropriation is $23.3 billion, which is $2.1 billion more than enacted in FY2017 (+10%), on a comparable basis that includes the Commodity Futures Trading Commission (CFTC; Table 2 ). The Administration had proposed a $15.8 billion discretionary total (a reduction of 25%), the House-passed bill $20 billion, and the Senate-reported bill $20.53 billion. The appropriations also carry mandatory spending--though that is largely determined in separate authorizing laws--that total nearly $123 billion. Thus, the overall total of the enacted FY2018 Agriculture appropriation is $146 billion. The Trump Administration released its full FY2018 budget request on May 23, 2017, along with the detailed justification from the U.S. Department of Agriculture (USDA). The Agriculture appropriations bill--formally known as the Agriculture, Rural Development, Food and Drug Administration, and Related Agencies Appropriations Act--funds all of USDA, excluding the U.S. Forest Service. It also funds the Food and Drug Administration (FDA) in the Department of Health and Human Services. In even-numbered fiscal years, the act carries CFTC funding under a practice started in FY2008 for handling House-Senate jurisdictional differences. Jurisdiction is with the House and Senate Committees on Appropriations and their respective Subcommittees on Agriculture, Rural Development, Food and Drug Administration, and Related Agencies. The bill includes mandatory and discretionary spending, but the discretionary amounts are the primary focus during the bill's development. The scope of the bill is shown in Figure 2 . The federal budget process treats discretionary and mandatory spending differently. Discretionary spending is controlled by annual appropriations acts and receives most of the attention during the appropriations process. The annual budget resolution process sets spending limits for discretionary appropriations. Agency operations (salaries and expenses) and many grant programs are discretionary. Mandatory spending --though carried in the appropriation and usually advanced unchanged--is controlled by budget rules (e.g., PAYGO) during the authorization process. Spending for so-called entitlement programs is set in laws such as the 2014 farm bill and 2010 child nutrition reauthorizations. In FY2018 Agriculture appropriations, discretionary appropriations were 16% ($23.3 billion) of the total. Mandatory spending carried in the act comprised $123 billion, about 84% of the $146 billion total. About $99 billion of the $123 billion mandatory amount could be attributed to programs in the 2014 farm bill ( Figure 2 ). Other programs are not in the authorizing jurisdiction of the Agriculture Committees. Within the discretionary total, the largest discretionary spending items are for the Special Supplemental Nutrition Program for Women, Infants, and Children (WIC); rural development; agricultural research; FDA; foreign food aid and trade; farm assistance program salaries and loans; food safety inspection; conservation; and animal and plant health programs ( Figure 2 ). The main mandatory spending items are the Supplemental Nutrition Assistance Program (SNAP, and other food and nutrition act programs), child nutrition (school lunch and related programs), crop insurance, and farm commodity and conservation programs paid through USDA's Commodity Credit Corporation (CCC). SNAP is referred to as an "appropriated entitlement" and requires an annual appropriation. Amounts for the nutrition program are based on projected spending needs. In contrast, the CCC operates on a line of credit. The annual appropriation provides funding to reimburse the Treasury for using this line of credit. Over time, changes by title of the Agriculture appropriations bill have generally been proportionate to changes in the bill's total discretionary limit, though some activities have sustained relative increases and decreases. Agriculture appropriations peaked in FY2010, declined through FY2013, and since then have increased ( Figure 3 ). Comparisons to historical benchmarks, though, may depend on adjustments for inflation and other factors ( Figure 4 ). The stacked bars in Figure 3 represent the discretionary spending that was authorized for each appropriations title since FY2008. Prior to FY2018 enactment, the total of the positive stacked bars is the budget authority contained in Titles I-VI. It was higher than the official discretionary spending allocation for the subcommittee (the line) because of the budgetary offset from negative amounts in Title VII general provisions and other scorekeeping adjustments. General provisions were net negative mostly because of rescissions and limits placed on mandatory programs. Like most new Administrations, the Trump Administration released its FY2018 budget request in 2017 later than the usually expected first week of February. It released an outline (sometimes called a "skinny budget") on March 16, 2017, that expressed intentions primarily at the Cabinet level. For USDA, it proposed a 21% reduction, including eliminating funding for some programs. The Administration's budget outline overlapped with Congress finishing FY2017 appropriations. On May 5, 2017, the explanatory statement for the FY2017 appropriation ( P.L. 115-31 ) addressed the direction of the new request for FY2018 by reminding the Administration of Congress's role: USDA and FDA should be mindful of Congressional authority to determine and set final funding levels for fiscal year 2018. Therefore, the agencies should not presuppose program funding outcomes and prematurely initiate action to redirect staffing prior to knowing final outcomes on fiscal year 2018 program funding. On May 23, 2017, the Administration released its full FY2018 budget request. USDA concurrently released its full budget summary and justification, as did the FDA. Some OMB proposals were not consistent with the USDA request. As an independent agency, CFTC requested a different amount in its budget justification than the Administration requested. For Agriculture appropriations (including CFTC), the Trump Administration requested $15.82 billion of discretionary spending, $5.3 billion less than in FY2017 (-25%; Table 2 , Figure 3 ). From these documents, the congressional appropriations committees evaluated the request and began to consider their own bills in the summer of 2017. At the time the House appropriations subcommittees began marking up their FY2018 bills, an FY2018 budget resolution had not yet been adopted. Therefore, the House Appropriations Committee incrementally made "302(b)" allocations to its subcommittees to facilitate markups beginning in June 2017. The Agriculture Subcommittee was allowed nearly $20 billion of discretionary budget authority for FY2018. The House Agriculture Appropriations Subcommittee marked up its FY2018 bill on June 28, 2017, by voice vote. On July 12, 2017, the full Appropriations Committee passed and reported an amended bill ( H.R. 3268 , H.Rept. 115-232 ) by voice vote ( Table 1 , Figure 1 ). As the beginning of the fiscal year neared without many floor-passed appropriations bills, the House passed on September 14, 2017, an eight-bill consolidated appropriation ( H.R. 3354 ) with Agriculture as Division B. It included several budget-neutral amendments to the reported version. The $20 billion discretionary total in the House-passed FY2018 Agriculture appropriation ( Table 2 , Figure 3 ) was officially $1.13 billion less than enacted in FY2017 (-5.3%, on a comparable basis that adds CFTC back to the FY2017 Agriculture appropriation's total). Compared to FY2017, the House-passed bill would have achieved this reduction primarily by reducing rural development by $262 million, nutrition assistance by $220 million, farm and conservation programs by $199 million, department administration by $123 million, and research by $98 million, among other changes. Table 3 provides details at the agency level. In the absence of an adopted FY2018 budget resolution, the Senate Appropriations Committee made 302(b) allocations to its subcommittees in July 2017, similar to the House approach. The Agriculture Subcommittee was allowed $20.53 billion of discretionary authority for FY2018. The Senate Agriculture Appropriations Subcommittee marked up its FY2018 bill on July 18, 2017, by voice vote. Two days later, the full Appropriations Committee passed and reported its amended bill ( S. 1603 , S.Rept. 115-131 ) on July 20, 2017, by a vote of 31-0 ( Table 1 , Figure 1 ). The discretionary total of the Senate-reported bill was $20.53 billion ( Table 2 , Figure 3 ), which was $352 million less than enacted in FY2017 without CFTC (-1.7%). The Senate-reported bill would have provided $776 million more than the House-passed bill on a comparable basis without the CFTC. The Senate-reported bill would have made fewer and smaller reductions compared to FY2017 than the House-passed bill. Compared to FY2017, it would have reduced rural development by $119 million and agricultural research by $57 million and increased foreign food aid by $140 million, providing more for each of these program areas than the House-passed bill ( Table 3 ). It would also have made $220 million more in reductions--through rescissions and changing mandatory programs--than the House-passed bill. FY2018 began on October 1, 2017, without an enacted appropriation. As a result, Congress has passed CRs to continue to fund the government. In general, a CR continues the funding rate and other provisions of the previous year's appropriation. However, the Office of Management and Budget (OMB) prorates funding to the agencies on an annualized basis for the duration of the CR through a process known as apportionment. CRs may also provide a different amount through anomalies or make specific administrative changes. 1. The first CR for FY2018 (Division D of P.L. 115-56 ) lasted until December 8, 2017. It continued FY2017 funding levels and provisions with two general exceptions and two anomalies for the agriculture appropriation: A 0.6791% across-the-board reduction (Section 101(b)). Sufficient funding to maintain mandatory program levels, including for nutrition programs (Section 111). An increase of about $2 million for the Commodity Supplemental Food Program, a domestic food assistance program that predominantly serves the low-income elderly. Rather than the FY2017 funding level of $236 million, the CR provides about $238 million for this program. This anomaly is typically included to maintain caseload and participation based on food costs (Section 116). A technical correction for the computation of a rescission to Section 32 funds in light of the availability that is allowed for carryover funds, especially for disaster payments that are at the discretion of the USDA (Section 117). 2. A second CR ( P.L. 115-90 ) extended the provisions and anomalies of the first CR to December 22, 2017. 3. A third CR ( P.L. 115-96 ) extended the CR to January 19, 2018. It also waived PAYGO rules (Section 5002) for the Tax Cuts and Jobs Act ( P.L. 115-97 ) that could have caused a sequestration of mandatory spending as an automatic budgetary offset, which could have affected the farm bill budget. 4. In the absence of a further CR or appropriation by January 19, a three-day government shutdown occurred through January 22, when a fourth CR ( P.L. 115-120 ) extended the CR to February 8, 2018. 5. In the absence of a further CR or appropriation by February 8, an overnight government shutdown occurred during the early morning of February 9, when a fifth CR ( P.L. 115-123 ) extended the CR to March 23, 2018. This CR was part of the Bipartisan Budget Act of 2018 that raised the budget caps for discretionary spending in FY2018 and FY2019, provided disaster assistance for agriculture, amended several farm bill provisions, and extended sequestration effects. On February 9, 2018, Congress passed the Bipartisan Budget Act of 2018 (BBA; P.L. 115-123 ), which broadly authorized supplemental appropriations, including for crop and livestock losses from 2017 hurricanes and wildfires (Division B, Subdivision 1, Title I). The act also included a six-week CR through March 23, 2018 (Division B, Subdivision 3). Importantly for the anticipated farm bill reauthorization, the BBA revised several agriculture programs, which had long-term policy implications because it changed farm bill statutes (Division B, Section 20101; and Division F) and added mandatory spending authority. Perhaps most importantly for completing the FY2018 appropriation, it raised the discretionary spending caps (Division C, Title I) that are in statute from the Budget Control Act of 2011 (BCA; P.L. 112-25 ). In supplemental appropriations, the BBA added $3.6 billion of disaster assistance in FY2018. Specifically, it provided $2.36 billion of block grants to the states for losses from 2017 hurricanes and wildfires. It added $941 million for conservation and watershed recovery, $165 million for rural water and wastewater recovery, and $89 million for disasters in six other USDA accounts. For the expected successor to the current farm bill, the BBA added $1.4 billion of mandatory funding to the 10-year baseline. Specifically, it added $1.1 billion for dairy programs, $240 million for permanent disaster assistance programs, and a $62 million net addition for cotton. The cotton addition is nearly $3 billion from adding seed cotton to the farm commodity programs, offset by about $2.9 billion in reductions from reallocating base acres and crop insurance. A version of these changes was in the Senate appropriations markup, Section 728 of S. 1603 . The BBA offsets some of these additions by extending sequestration on mandatory accounts under the BCA ( Appendix A ) for two more years, for FY2026 and FY2027, at an estimated future effect on agriculture accounts of $2.6 billion. Raising the budget caps for overall discretionary spending--that were set by the BCA--facilitated the development of a final full-year appropriation for FY2018. A majority in Congress desired greater spending for at least some of the appropriations subcommittees. For FY2018, the BBA raised the nondefense discretionary cap by $63 billion from $516 billion to $579 billion and for defense by $80 billion from $549 billion to $629 billion. For FY2019, it raised the nondefense discretionary cap by $68 billion and the defense cap by $85 billion. On March 23, 2018, Congress passed the FY2018 Consolidated Appropriations Act ( H.R. 1625 ). The discretionary total of the Agriculture portion (Division A) is $23.3 billion, an increase of $2.1 billion above the enacted amount in FY2017 (+10%, on a comparable basis that includes CFTC; Table 2 ). The discretionary total is higher than in either the House-passed or Senate-reported bills, as became possible under the BBA, and is nearly as high as the peak in Agriculture appropriations in FY2010 ( Figure 3 ). The appropriations also carry nearly $123 billion of mandatory spending, though that total is largely determined in separate authorizing laws. Thus, the overall total of the enacted FY2018 Agriculture appropriation is about $146 billion ( Figure 2 ). Compared to FY2017, the enacted appropriation increases spending primarily through an extra $1.38 billion in General Provisions, for programs that receive funding elsewhere in the appropriation. Amounts in General Provisions may not be as likely to become part of the annual base for those programs. For example, in addition to amounts for the Rural Utilities Service elsewhere in the Act, the General Provisions provide an additional $500 million for rural water programs, and $600 million for expanding rural broadband. The General Provisions also provide an extra $116 million for Food for Peace foreign food aid, and $94 million for opioid enforcement and surveillance at FDA ( Table 3 ). In the regular portion of the appropriations for agencies, the Consolidated Appropriations Act increases agricultural research spending by $138 million over four agencies (including increasing the Agriculture and Food Research Initiative by $25 million to $400 million, and increasing buildings and facilities funding by $41 million for the Agricultural Research Service). It also increases the base amount for Food for Peace by $134 million to $1.6 billion. Unlike the practice from more than the past decade, the FY2018 Agriculture appropriation does not impose as many changes to mandatory program spending (CHIMPS), such as to the Environmental Quality Incentives Program (EQIP), Fresh Fruit and Vegetable program, or rescissions to the Rural Development cushion of credit account or to Section 32. The absence of these usual CHIMPS in the FY2018 Agriculture appropriation costs about $740 million against the discretionary limit of the bill compared to FY2017. Table 3 presents the amounts in the FY2018 Consolidated Appropriations Act by agency and many programs, compared to the House-passed, Senate-reported, and Administration proposals. It also compares the FY2018 appropriation to three prior years, FY2015-FY2017. Appendix A. Budget Sequestration Sequestration is a process of automatic, largely across-the-board reductions that permanently cancel mandatory and/or discretionary budget authority. Sequestration is triggered as a budget enforcement mechanism when federal spending would exceed statutory budget goals. Sequestration is currently authorized in the BCA ( P.L. 112-25 ) for discretionary spending through FY2021 and for mandatory spending through FY2027, as amended by subsequent acts and explained below. Besides FY2013--when the timing of appropriations and the first year of sequestration resulted in triggering sequestration on discretionary spending--Bipartisan Budget Acts in 2013, 2015, and 2018 ( P.L. 113-67 , P.L. 114-74 , and P.L. 115-123 , respectively) have avoided sequestration on discretionary spending. These acts raised the discretionary budget caps that were placed in statute by the BCA and allowed Congress to enact larger appropriations than were allowed under the BCA. Sequestration, however, continues to apply to certain accounts of mandatory spending and is not avoided by the Bipartisan Budget Acts ( Table A-1 ). The original FY2021 sunset on the sequestration of mandatory accounts has been extended four times to pay for avoiding sequestration of discretionary spending in the near term or as a general budgetary offset for other bills: 1. Congress extended the duration of mandatory sequestration by two years (until FY2023) as an offset in the Bipartisan Budget Act of 2013. 2. Congress extended it by another year (until FY2024) to maintain retirement benefits for certain military personnel ( P.L. 113-82 ). 3. Congress extended sequestration on nonexempt mandatory accounts another year (until FY2025) as an offset in the Bipartisan Budget Act of 2015. 4. Congress extended sequestration on nonexempt mandatory accounts by another two years (until FY2027) as an offset in the Bipartisan Budget Act of 2018 ( P.L. 115-123 Division C, Section 30101(c)). Some farm bill mandatory programs are exempt from sequestration. The nutrition programs and the Conservation Reserve Program are statutorily exempt, and some prior legal obligations in crop insurance and the farm commodity programs may be exempt as determined by OMB. Generally speaking, the experience since FY2013 is that OMB has ruled that most of crop insurance is exempt from sequestration, while the farm commodity programs, disaster assistance, and most conservation programs have been subject to it. For example, under the 2014 farm bill, the first farm commodity program payments began to be paid in October 2015, and USDA indicated that they would be subject to the 6.8% reduction that was applicable to FY2016. Thus, sequestration on nonexempt mandatory accounts continues in FY2018. Nonexempt mandatory spending in agriculture accounts are reduced by a 6.6% sequestration rate and thus are paid at 93.4% of what they would have otherwise provided. This results in a reduction of about $1.3 billion less than what would have been authorized from mandatory agriculture accounts in FY2018. Table A-1 shows the rates of sequestration that have been announced so far and the total amounts of budget authority that have been cancelled from accounts in the Agriculture appropriations bill. Table A-2 provides additional detail at the account level for sequestration on mandatory accounts within the jurisdiction of Agriculture appropriations. Appendix B. Action on Agriculture Appropriations

The Agriculture appropriations bill funds the U.S. Department of Agriculture (USDA) except for the Forest Service. It also funds the Food and Drug Administration (FDA) and--in even-numbered fiscal years--the Commodity Futures Trading Commission (CFTC). Agriculture appropriations include both mandatory and discretionary spending. Discretionary amounts, though, are the primary focus during the bill's development, since mandatory amounts are generally set by authorizing laws such as the farm bill. The largest discretionary spending items are the Special Supplemental Nutrition Program for Women, Infants, and Children (WIC); agricultural research; FDA; rural development; foreign food aid and trade; farm assistance programs; food safety inspection; conservation; and animal and plant health programs. The main mandatory spending items are the Supplemental Nutrition Assistance Program (SNAP), child nutrition, crop insurance, and the farm commodity and conservation programs paid by the Commodity Credit Corporation. Congress passed the FY2018 Consolidated Appropriations Act on March 23, 2018 (H.R. 1625). The discretionary total of the FY2018 Agriculture appropriation (Division A) is $23.3 billion. This is an increase of $2.1 billion above the amount enacted in FY2017 (+10%). The appropriations also carry nearly $123 billion of mandatory spending, though that amount is largely determined in separate authorizing laws. Thus, the overall total of the enacted FY2018 Agriculture appropriation is about $146 billion. Compared to FY2017, the enacted appropriation increases spending primarily through an extra $1.38 billion in General Provisions, including an additional $500 million for rural water programs, $600 million for rural broadband, $116 million for Food for Peace foreign food aid, and $94 million for opioid enforcement and surveillance. The Consolidated Appropriations Act also increases regular funding for agricultural research by $138 million, and Food for Peace by $134 million. Unlike the past decade, the FY2018 Agriculture appropriation does not include as many changes to mandatory program spending (CHIMPS), such as to the Environmental Quality Incentives Program (EQIP). Both the House and Senate Appropriations Committees reported Agriculture appropriations bills in July 2017 (H.R. 3268, S. 1603). As the beginning of the fiscal year approached, the House passed a consolidated bill in September 2017 that included an agriculture appropriation (Division B of H.R. 3354). The full Senate did not consider an agriculture appropriations bill on the floor. The government continued to operate for the first six months of the fiscal year under continuing resolutions (CRs). The last CR, the Bipartisan Budget Act of 2018 (P.L. 115-123), also enacted supplemental appropriations that included agricultural assistance, amended certain farm bill statutes, and passed new, higher budget caps that facilitated the final appropriation.

Hedge funds are essentially unregulated mutual funds. They are pools of invested money that buy and sell stocks and bonds and many other assets, including foreign currencies, precious metals, commodities, and derivatives. Some funds follow narrowly defined investment strategies (e.g., investing only in mortgage bonds, or East Asian stock markets), while others, the so-called macro funds, invest their capital in any market in the world where the fund managers see opportunities for profit. Hedge funds are structured to avoid SEC regulation. To avoid becoming public issuers of securities, subject to extensive disclosure requirements, they accept funds only from "accredited investors," defined by SEC regulations as persons with assets of $1 million or more. Hedge funds also avail themselves of statutory exemptions in the Investment Company Act of 1940, which governs public mutual funds. Mutual funds must comply with a comprehensive set of regulations designed to protect small, unsophisticated investors. These regulations include limits on the use of borrowed money, strict record keeping and reporting rules, capital structure requirements, mandated adherence to specified investment goals and strategies, bonding requirements, and a requirement that shareholder approval be obtained (through proxy solicitation) for certain fund business. An investment company becomes subject to this regulation only if it has 100 or more shareholders; hedge funds therefore generally limit themselves to 99 investors. (The National Securities Market Improvement Act of 1996 ( P.L. 104-290 ) broadened this exemption by permitting hedge funds to have an unlimited number of partners, provided that each is a "qualified purchaser" with at least $5 million in total invested assets.) Most hedge funds are structured as limited partnerships, with a few general partners who also serve as investment managers. Hedge fund managers are often ex-employees of large securities firms, who strike out on their own in search perhaps of greater entrepreneurial freedom and certainly in search of greater financial rewards. Those rewards, even by Wall Street standards, can be extremely high. In addition to the return on his or her own capital, the typical hedge fund manager takes 15%-25% of all profits earned by the fund plus an annual management fee of 1%-2% of total fund assets. Data on hedge funds are available from several private sources, but estimates as to the size of the hedge fund universe vary considerably. Before the financial crisis that began in 2007, estimates were in the range of 8,000-9,000 funds, with about $2 trillion in assets under management. Large numbers of funds have closed as a result of severe losses in the bear markets of 2008; George Soros, one of the best-known hedge fund managers, has estimated that the value of capital under management may shrink by 75%. Starting a hedge fund is relatively simple, and, with a few quarters of good results, new hedge fund managers can attract capital and thrive on performance and management fees. Because many of them make risky investments in search of high returns, hedge funds also have a high mortality rate. Studies find that the rate of attrition for funds is about 20% per year, and that the average life span is about three years. Estimates of the average annual return earned by hedge funds differ. Some studies find that they generally outperform common benchmarks such as the Standard & Poor's 500, but others conclude that they have lagged. The short life span of many funds creates obvious difficulties for measurement, including a strong survivorship bias: the many funds that shut down each year are not included in return calculations. Annual return figures of course conceal a wide variation from year to year and from fund to fund. In any period, the law of averages dictates that at least a few funds will do extremely well. These success stories may explain the continued popularity of hedge funds with investors, despite the high fees that they charge, and the high risk of loss. Hedge funds are understood to be high-risk/high-return operations, where investors must be prepared for losses. Investors who accept the risks are seeking high returns or a means to diversify their portfolio risk. As long as these investors are sophisticated and wealthy, as current law requires, hedge fund losses or even failures should not be a public policy concern. However, a 1998 case provided an exception to this rule. Long-Term Capital Management (LTCM), a fund headquartered in Connecticut and chartered in the Cayman Islands, opened in 1994 and produced annual returns of over 40% through 1996. It was billed as a "market-neutral" fund, that is, its positions were based not on predictions of the direction of interest rates or other variables, but on the persistence of historical price relationships, or spreads, among different types of bonds. In 1998, however, turmoil in world markets, stemming from financial crises in Asia and Russia, proved to be too much for its computer models: during the month of August 1998 alone, the fund lost almost $2 billion, or about half its capital. By late September, LTCM was on the verge of collapse, whereupon the New York Fed stepped in and "facilitated" a rescue package of $3.6 billion cash contributed by 13 private financial institutions, who became 90% owners of the fund's portfolio. Why was government intervention needed? The Fed cited concerns about systemic risk to the world's financial markets--while LTCM's capital was a relatively modest $3-$4 billion (during the first half of 1998), it had borrowed extensively from a broad range of financial institutions, domestic and foreign, so that the total value of its securities holdings was estimated to be about $80-$100 billion. In addition, the fund supplemented its holdings of stocks and bonds with complex and extensive derivatives positions, magnifying the total exposure of the fund's creditors and counterparties, and making the effect of a general collapse and default difficult to gauge. If the fund (or its creditors) had tried to liquidate its assets and unwind its derivative positions in the troubled market conditions that prevailed, the result might have been extreme price drops and high volatility, with a negative impact on firms not directly involved with LTCM. Critics of the Fed's action expressed concerns about moral hazard--if market participants believe they will be rescued from their mistakes (because they are "too big to fail"), they may take imprudent risks. To the Fed, however, the immediate dangers of system-wide damage to financial markets, and possibly to the real economy as well, clearly outweighed the risks of creating perceptions of an expanded federal safety net. In the wake of the Long-Term Capital Management episode, systemic risk emerged as the major policy issue raised by hedge funds. The funds had demonstrated an ability to raise large sums of money from wealthy individuals and institutions, and to leverage those sums, by borrowing and through the use of derivatives, until they become so large that even U.S. financial markets may be at risk if they fail. Not all hedge funds borrow heavily and not all follow high-risk strategies. But many do, and there is no reason to think that other hedge funds will not amass positions as large and complex as LTCM's. In time, some of them can be expected to suffer equally spectacular losses. The systemic risk concerns may be summarized as follows: failing funds may sell billions of dollars of securities at a time when the liquidity to absorb them is not present, causing markets to "seize up"; lenders to hedge funds, including federally insured banks, may suffer serious losses when funds default--LTCM raised questions about their ability to evaluate the risks lending to hedge funds; default on derivatives contracts may disrupt markets and may threaten hedge fund counterparties in ways that are hard to predict, given the lack of comprehensive regulatory supervision over derivative instruments; and since little information about hedge fund portfolios and trading strategies is publicly available, uncertainty regarding the solvency of hedge funds or their lenders and trading partners may exacerbate panic in the markets. LTCM illustrates the dangers of hedge fund failure. However, the funds' successes can also worry policymakers and regulators. Particularly in foreign exchange markets, manipulation by hedge funds has been blamed as a cause of instability (e.g., the European currency crises in the early 1990s and the Asian devaluations of 1997-1998). Hedge funds and other speculators can borrow a currency and sell it, hoping to profit if the currency is devalued (allowing them to repay with cheaper money). If the size of these sales or short positions is significant in relation to the target country's foreign currency reserves, pressure to devalue can become intense. To defend the currency's value may call for painful steps such as sharp increases in domestic interest rates, which have negative effects on the stock market and economic growth. In the United States, which has not been the target of such speculative raids, many argue that blaming hedge funds for crises is like shooting the messenger who brings bad news, and that speculators' profit opportunities are often created by bad economic policies. The effect of speculation on price volatility is an unresolved question in finance. While there has never been a conclusive demonstration that speculation causes volatility, the two are frequently observed together. Hedge funds, as the most visible agents of speculation in today's global markets, are looked upon by some regulators and market participants with a fair amount of suspicion. In April 1999, the President's Working Group on Financial Markets, which includes the Fed, the SEC, the CFTC, and Treasury, issued a report on hedge funds. The report cites the LTCM case as demonstrating that a single excessively leveraged institution can pose a threat to other institutions and to the financial system, and found that the proprietary trading operations of commercial and investment banks follow the same strategies in the same markets as the hedge funds, and they are much larger and often more highly leveraged. The general issue, then, is how to constrain excessive leverage. The Working Group concluded that more disclosure of financial information by hedge funds was desirable. The report recommended that large funds be required to publish annual disclosure statements containing a "snapshot" of their portfolios and a comprehensive estimate of the riskiness of the fund's position, and that public companies and financial institutions should include in their quarterly and annual reports a statement of their financial exposure to hedge funds and other highly leveraged entities. In 2003, in response to continued rapid growth in hedge fund investment, an SEC staff report recommended that hedge funds be required to register as investment advisers. The staff set out several benefits to mandatory registration: funds registered as investment advisers would become subject to regular examinations, permitting early detection and deterrence of fraud; the SEC would gain basic information about hedge fund investments and strategies in markets where they may have a significant impact; and the SEC could require registered hedge funds to adopt uniform standards and improve disclosures they make to their investors. On October 26, 2004, the SEC adopted (by a 3-2 vote) a rule to require hedge funds to register under the Investment Advisers Act. The rule was controversial: opponents argued that hedge fund investors are sophisticated and know the risks, that the SEC already has authority to pursue hedge fund fraud, that systemic risk concerns are overstated, and that instead of trying to circumscribe hedge funds, the SEC ought to be encouraging registered mutual funds to adopt hedge fund investment techniques. The regulation fell short of what some critics of hedge fund behavior would have liked to see. The SEC would still not be able to monitor hedge fund trading in real time, and the possibility of another LTCM remains. However, the SEC explicitly decided against this course--the 2003 staff report found "no justification for direct regulation" and the adopted rule had "no interest in impeding the manner in which a hedge fund invests or placing restrictions on a hedge fund's ability to trade securities, use leverage, sell securities short or enter into derivatives transactions." The rule took effect on February 1, 2006, and some basic information on registering hedge funds appeared on the SEC website. However, on June 23, 2006, an appeals court found that the rule was arbitrary and not compatible with the plain language of the Investment Advisers Act, vacated it, and returned it to the SEC for reconsideration. SEC Chairman Cox instructed the SEC's professional staff to provide the Commission with a set of alternatives for consideration. Another issue involves the "retailization" of hedge funds. As noted above, all fund investors must meet an "accredited investor" standard: they must have incomes of at least $200,000 and assets of $1 million. This threshold was established in the 1980s, and a much larger fraction of the population now meets the test, particularly since the $1 million includes the value of the investor's residence. The SEC has been concerned that relatively unsophisticated households may be putting their money in hedge funds, encouraged by market developments such as the introduction of funds-of-hedge funds, which accept smaller investments than traditional funds. A related investor protection issue arises from the fact that pension funds and other institutional investors are placing more of their money with hedge funds, meaning that unsophisticated beneficiaries may be unwittingly at risk of significant hedge fund-related losses, if the plan fiduciaries are not prudent and cautious. On December 13, 2006, the SEC proposed a regulation that would raise the accredited investor threshold from $1 million to $2.5 million in assets (excluding the value of the investor's home). If adopted, the rule would significantly reduce the pool of potential hedge fund investors, but would not be expected to have a strong impact on the largest funds, which do not depend on "mere" millionaires. The SEC received many unfavorable comments from investors who meet the current standard but would be excluded under the new limits: these investors do not wish to be protected from risks that the SEC might view as excessive. The SEC has yet to adopt a final rule raising the accredited investor standard. In February 2007, the President's Working Group issued an "Agreement Among PWG and U.S. Agency Principals on Principles and Guidelines Regarding Private Pools of Capital." The document expresses the view that policies that support market discipline, participant awareness of risk, and prudent risk management are the best means of protecting investors and limiting systemic risk. The Agreement does not call for legislation to give regulators new powers or authorities to regulate hedge funds. In December 2008, the revelation that a firm registered as both a broker/dealer and an investment adviser with the SEC, Bernard L. Madoff Investment Securities, had operated a multi-billion dollar Ponzi scheme raised new questions about the efficacy of market self-regulation. A number of hedge funds and funds-of-funds had placed billions of their clients' money with Madoff, but failed to detect the fraud. The Madoff case prompted calls for more stringent regulation of investment advisers, including hedge funds. The Obama Administration's 2009 white paper, Financial Regulatory Reform: A New Foundation , recommends that advisers to hedge funds (and other private pools of capital, including private equity funds and venture capital funds) whose assets under management exceed some modest threshold should be required to register with the SEC under the Investment Advisers Act. The advisers should be required to report information on the funds they manage that is sufficient to assess whether any fund poses a threat to financial stability. In the 109 th Congress, the House passed H.R. 6079 (Representative Castle), which directed the President's Working Group to study the growth of hedge funds, the risks they pose, their use of leverage, and the benefits they confer. The Senate did not act on the bill. In the 111 th Congress, H.R. 711 (Representatives Capuano and Castle) would remove the exemption in the Investment Advisers Act for firms with fewer than 15 clients, which was the figure at the center of the 2006 Goldstein decision. This would require hedge funds with more than $25 million in client funds to register as investment advisers with the SEC. H.R. 712 (Representative Castle) would require defined benefit pension plans to disclose their investments in hedge funds. H.R. 713 (Representative Castle) directs the President's Working Group on Financial Markets to conduct a study of the hedge fund industry, and report to Congress with any recommendations regarding hedge fund regulation. S. 344 (Senator Grassley) would limit the exemptions available under the Investment Company Act, requiring hedge funds with more than $50 million under management to register with the SEC. S. 506 and H.R. 1265 would change the tax treatment of offshore funds. S. 1276 would require managers of hedge funds to register as investment advisers, private equity firms, and venture capital funds, and would authorize the SEC to collect systemic risk data from them. Hedge funds are not seen as a principal cause of the financial crisis that erupted in 2007. They are, however, widely viewed as part of the "shadow" financial system that includes over-the-counter derivatives, non-bank lending, and other lightly regulated or non-regulated financial sectors. As part of sweeping regulatory reform legislation before the House and Senate in the 111 th Congress, certain hedge funds would be required to register with the SEC and to provide information about their positions and trading strategies to be shared with the systemic risk authorities. Under H.R. 4173 , passed by the House on December 11, 2009, managers of funds with more than $150 million under management would be required to register as investment advisers with the SEC. They would be required to report (on a confidential basis) certain portfolio information of interest to the Federal Reserve or other systemic risk authorities. The bill provides exemptions for advisers to venture capital funds and small business investment corporations (SBICs). Senator Dodd's Restoring American Financial Stability Act, as ordered reported by the Senate Banking Committee on March 22, 2010, includes similar provisions regarding registration and reporting of systemic risk data. The Senate version also exempts venture capital funds, private equity funds, and SBICs. It sets the SEC registration threshold for all investment advisers at $100 million in assets under management. Advisers below that figure would register with the states.

In an echo of the Robber Baron Era, the late 20th century saw the rise of a new elite class, who made their fortunes not in steel, oil, or railroads, but in financial speculation. These gilded few are the managers of a group of private, unregulated investment partnerships, called hedge funds. Deploying their own capital and that of well-to-do investors, successful hedge fund managers frequently (but not consistently) outperform public mutual funds. Hedge funds use many different investment strategies, but the largest and best-known funds engage in high-risk speculation in markets around the world. Wherever there is financial volatility, the hedge funds will probably be there. Hedge funds can also lose money very quickly. In 1998, one fund--Long-Term Capital Management--saw its capital shrink from about $4 billion to a few hundred million in a matter of weeks. To prevent default, the Federal Reserve engineered a rescue by 13 large commercial and investment banks. Intervention was thought necessary because the fund's failure might have caused widespread disruption in financial markets--the feared scenario then closely resembled what actually occurred in 2008 (except that large, regulated financial institutions took the place of hedge funds). Despite the risks, investors poured money into hedge funds in recent years, until stock market losses in 2008 prompted a wave of redemption requests. In view of the growing impact of hedge funds on a variety of financial markets, the Securities and Exchange Commission (SEC) in October 2004 adopted a regulation that required hedge funds to register as investment advisers, disclose basic information about their operations, and open their books for inspection. The regulation took effect in February 2006, but on June 23, 2006, a court challenge was upheld and the rule was vacated. In December 2006, the SEC proposed raising the "accredited investor" standard--to be permitted to invest in hedge funds, an investor would need $2.5 million in assets, instead of $1 million. In the face of opposition from individuals who did not want to be protected from high-risk, unregulated investment opportunities, the SEC did not adopt a final rule. Hedge funds are not seen as a principal cause of the financial crisis that erupted in 2007. They are, however, widely viewed as part of the "shadow" financial system that includes over-the-counter derivatives, non-bank lending, and other lightly regulated or non-regulated financial sectors. As part of sweeping regulatory reform legislation before the House and Senate in the 111th Congress, certain hedge funds would be required to register with the SEC and to provide information about their positions and trading strategies to be shared with the systemic risk authorities. Under H.R. 4173, passed by the House on December 11, 2009, managers of funds with more than $150 million under management would be required to register as investment advisers with the SEC. They would be required to report (on a confidential basis) certain portfolio information of interest to the Federal Reserve or other systemic risk authorities. The bill provides exemptions for advisers to venture capital funds and small business investment corporations. The Restoring American Financial Stability Act, as ordered reported by the Senate Banking Committee on March 22, 2010, includes similar provisions regarding registration and reporting of systemic risk data. The Senate version exempts venture capital funds and private equity funds. It sets the SEC registration threshold for all investment advisers at $100 million in assets under management. Advisers below that figure would be regulated by the states.

RS21812 -- March 11 Terrorist Attacks in Madrid and Spain's Elections: Implications for U.S.Policy October 5, 2004 Summary This report discusses the March 11, 2004 terrorist attacks in Madrid,Spain and their impact on Spain's March 14 parliamentary elections, which resulted in the surprise victory of theSocialist Party over the ruling right-of-center Popular Party. The report also examines some of the possibleimplications of the attacks and the elections for the U.S.-led coalition in Iraq, the war on terrorism and U.S.-Spainrelations. This report will be updated as warranted. See also CRS Report RS21794 , Iraq Coalition: PublicOpinionIndicators in Selected European Countries , by [author name scrubbed]. During the morning rush hour of March 11, 2004, bombs hidden in 10 backpacks exploded within 15 minutesof eachother on four trains along a nine-mile stretch of a commuter line from the suburb of Santa Eugenia to the busyAtocharail terminal in Madrid. Three other backpack bombs were defused by police. The explosions killed 191 personsandwounded over 1800 others. The death toll was by far the largest ever for a terrorist attack in Spain and was thelargestin Europe since the 1988 bombing of a Pan Am airliner over Lockerbie, Scotland. The attacks took place exactlytwoand one-half years after the terrorist attacks on the United States on September 11, 2001. The Spanish government, led by Prime Minister Jose Maria Aznar of the right-of-center Popular Party (PP), quicklyinsisted that the attacks were the work of the Basque terrorist group ETA and downplayed any suggestion thatIslamicextremists could be involved. In justifying their view, Spanish officials noted that they had stopped an ETA efforttoplace bombs on trains on Christmas Eve 2003 and had intercepted on February 29 a Madrid-bound van loaded bytheETA with one thousand pounds of explosives. On the day of the attack, at Spain's urging, the U.N. Security Councilpassed Resolution 1530, which condemned ETA's alleged role in the bombing. However, skeptics noted that thescope of the attacks, the detailed planning and precision needed to carry them out, and above all, the huge casualtytollwere more likely to be hallmarks of Al Qaeda or an Al Qaeda-like organization, not ETA. The credibility of the government began to crumble quickly as indications emerged of the possible involvement ofIslamic extremists in the bombings. Less than four hours after the attacks, police found several detonators and anaudiotape of verses from the Koran in an abandoned van in the town of Alcala de Henares, through which thebombedtrains had passed. About 12 hours after the attacks, police found a cellphone from an unexploded backpack bomb. They traced it to a business owned by a Moroccan immigrant named Jamal Zougam, who was suspected of havinglinks to Al Qaeda. Despite these discoveries on the day of the attacks, the government continued to insist publiclythatETA was responsible until hours before the polls opened on March 14, when police arrested Zougam as well as twoother Moroccans and two Indians suspected of involvement in the attacks. (1) The government's perceived mishandling of the crisis sparked outrage among many Spaniards. Critics of the government charged that it had deliberately tried to focus blame on ETA rather than Al Qaeda, knowing that if thepublic believed that ETA had committed the attacks, the government's popularity could be enhanced, due to thebroadpublic support for its hard-line stance against ETA. On the other hand, if Al Qaeda or an affiliated group wasresponsible, critics asserted, the government feared that it would lose support because many voters would believethatit had brought the attacks on Spain by its highly unpopular support for the war in Iraq. Spanish police have made progress in breaking up the terrorist cell responsible for the attack. On March 30, SpanishInterior Minister Angel Acebes said that the government suspected the Al Qaeda-linked Moroccan IslamicCombatantGroup with involvement in the attacks. Spanish and Moroccan officials believe the group was also involved in May2003 suicide bombing attacks in Casablanca, Morocco which killed 45 people, including several Spaniards. OnApril2, an unexploded bomb was found on railroad tracks between Madrid and Seville. On April 3, seven men suspectedofinvolvement in the Madrid attacks were killed when they blew themselves up after they were surrounded by police.The dead included the alleged leader of the terrorists, Serhane ben Abdelmajid Farkhet, known as "the Tunisian." Police found evidence that the group was ready to commit additional attacks. Police have said that the groupfinancedits activities through drug trafficking and other crimes. In June 2004, Italian police arrested Rabei Osman SayedAhmed, known as 'Mohammed the Egyptian." Ahmed, a former explosives instructor in Al Qaeda training camps,was one of the principal planners of the March 11 attacks, according to police. By September 2004, nearly twodozenpersons charged with involvement in the attacks were in police custody. A parliamentary commission began aninvestigation into the March 11 attacks and the government's response to them in June 2004. The terrorist attacks took place just before Spain's March 14 parliamentary elections, leading some observerstoconclude that they may have been intended to influence the vote. In a public opinion poll taken in February 2004,two-thirds of those polled said that the war in Iraq had increased the threat of terrorism, and 85% were concernedabout a possible terrorist strike against Spain. (2) Nevertheless, although the opposition Socialist Party (PSOE) led byJose Luis Rodriguez Zapatero campaigned in part on the strong public opposition to the government's Iraq policy,theruling PP appeared to be poised for a narrow victory, based on its record of a largely successful economic policyandits tough stand against ETA. The PP campaign was led not by Aznar, who is retiring from politics at the end of histerm, but by his successor as PP leader, Mariano Rajoy. Although the PP held a lead in opinion polls in the weeks prior to the election, its projected margin of victory shranksteadily. According to the final opinion polls published on March 7 (Spanish law imposes a blackout on public pollsfive days before an election), PP was expected to win 42% of the vote and the PSOE 38%. These totals would havemeant that the PP would likely have lost its absolute majority in parliament, but would have likely stayed in powerincoalition with smaller regional parties. Another late poll taken before the bombings put the PP's lead at 2.5%. Internal polls of both parties on the day before the attacks reportedly had the two parties in a virtual dead heat. (3) The results of the election surprised many observers. The Socialist Party of Spain (PSOE) won 42.5% of thevote tothe PP's 37.6%. The Socialists won 164 seats in the Congress of Deputies, up from 125 in the previous parliament. The PP won 148 seats, down from its previous total of 183 seats. The Socialists fell short of an absolute majority,sothey will have to form a coalition, perhaps among the United Left, a tiny, hard-line Communist party, and severalregional parties. The PP maintained control of the Senate, the regionally-based house of the parliament. Turnout for the vote was 77.2%, up from 68.7% in the 2000 elections. It should be noted that this turnout, while high,is not unprecedented in Spain's recent electoral history, and is often associated with changes in government. Turnoutin 1996 was 77.38% and 79.97% in 1982, each case corresponding to a victory by the opposition of the time. (4) SomeSpanish observers attributed a large part of the PSOE's success to the votes of about 2 million young, first-timevoters. Madrid-based observers noted that the news of the arrest of Al Qaeda-linked figures on the evening ofMarch13 was transmitted rapidly among young people by cellphone, as was the exhortation, perhaps encouraged bySocialistsupporters, to punish the government at the polls. (5) After the elections, a delicate issue raised by political leaders and analysts in Spain and throughout the world has been:did Al Qaeda "win" this election by intimidating the Spanish electorate (thereby perhaps setting a troublingprecedentfor other countries), or did the election result demonstrate the strength of Spain's democracy? Some Spaniards,especially supporters of the Socialists, said that the result did not reflect a desire to appease terrorists, but was duetopublic anger at an allegedly arrogant government that had made decisions on Iraq and other issues without thesupportof the Spanish public. They note that public opinion polls had shown that up to 90% of the public was opposed tothegovernment's support for the war in Iraq and rejected a link between the war on terrorism and the war in Iraq. Theeffort to blame ETA for the March 11 bombing was the final straw for many voters, they assert. As for the chargethatthe terrorist attacks had determined the outcome, Zapatero's supporters point to a post-election poll in which only8.8% of those polled said that the terrorist attacks had affected their vote. (6) Those critical of the election result note that the government appeared to be headed for a narrow victory just daysbefore the attack, appearing to make the attack the decisive factor in the result. Some observers, including somein theUnited States, have criticized the election results as dangerous appeasement of terrorists. On March 17, HouseSpeaker Dennis Hastert said, "Here's a country that stood against terrorism and had a huge terrorist act within theircountry, and they chose to change their government and to, in a sense, appease terrorists." Representative HenryHyde,chairman of the House International Relations Committee, said "the vote in Spain was a great victory for AlQaeda." (7) Administration officials have avoided making statements directly critical of the election results, perhaps fearing theirimpact on relations with the new government. Like their Socialist adversaries, Spanish conservatives reject any implication that the election result revealed cowardice by the Spanish people, noting Spain's struggle of more than three decades against ETA and its continuedcommitment to the deployment in Afghanistan after a May 2003 plane crash that killed 62 Spanish soldiers returningfrom the country. However, according to one view, some Spaniards may be laboring under a delusion that they canopt out of the dangers of globalization, while enjoying the benefits. According to this interpretation, many in Spainmay believe that their country is a secondary player in world affairs and should not get mixed up in great powerpolitics. This supposed attitude is said to be a result of Spain's historical development, which has included acenturies-long decline from great power status and international isolation under the Franco regime. These observersbelieve that this attitude may be bolstered by perceptions among some Spaniards that the United States, includingtheBush Administration, knows little about Spain, and is insensitive to Spanish concerns. (8) On April 18, 2004, the day after the new Spanish government took office, Zapatero announced the immediate withdrawal of the 1,300 Spanish troops in Iraq. The suddenness of the move came as a surprise to many observers,because during the campaign Zapatero had left open at least the possibility that the troops could stay, if certainconditions were met. In a five-minute phone call to Zapatero, President Bush expressed regret about the "abrupt"Spanish decision and warned against taking actions that would give "false comfort to terrorists." All Spanishcombattroops left Iraq by April 27. Unnamed U.S. officials sharply criticized the way the withdrawal was planned, sayingitwas done without proper coordination and in an "unprofessional" way that could unnecessarily jeopardize operationsand lives. (9) Given that Spain's troops made up lessthan 1% of coalition forces in Iraq, it may be argued that thelong-term military impact of a Spanish withdrawal may not be dramatic. However, some observers are concernedthatthe Spanish withdrawal could be part of a trend of declining public support for the Iraq mission in Europeanmembers,which could undermine the coalition in the long run. (10) Zapatero has stressed that his first priority is the fight against terrorism, and has called for closer cooperation amongEU police and intelligence services. In September 2004, French and Spanish officials announced a joint unit ofpoliceand judges to combat terrorist groups, including ETA and Islamic extremists. However, the new government'scommitment to use military force to fight terror may be less certain. Zapatero has said that military force shouldbe a"last resort' in the war against terrorism, claiming that it "can never be an effective method for eliminating orfightingfanatic, radical and criminal groups." (11) Nevertheless, as a signal that it is still committed to the global war on terror, Spain expanded its contribution to theInternational Security Assistance Force (ISAF) in Afghanistan from 137 to 1,040 in August 2004, in order to provideadditional security for Afghanistan's October 2004 elections. However, Spain plans to withdraw 500 of the troopsafter the elections, despite Afghan pleas to extend the deployment of the entire contingent. The change in government in Spain may have a significant effect on U.S.-Spanish relations. The close, personal relationship that developed between President Bush and Aznar is unlikely to be repeated with Zapatero. Aznarforgeda close relationship with the United States in part because he believed that a partnership with the world's onlysuperpower would enhance Spain's role in the world, making it a major international player. A close alliance withtheUnited States also secured U.S. support and aid for Aznar's tough stance against ETA and Basque separatism. Aznar's critics said that the Spanish leader was motivated by a desire to enhance his own personal prestige ratherthanto serve Spain's real interests. In contrast to Aznar's closeness to the Administration, Zapatero appeared to beunconcerned that some of his initial remarks might be taken as insults by the White House. For example, he assertedthat President Bush had based his Iraq policy on "lies" and suggested that the American people should vote him outofoffice in November 2004. (12) More recently, hesuggested that the chances for peace in Iraq would enhanced if morecountries followed Spain's example and pulled their forces out of Iraq, causing the United States to seek aclarification of his remarks. (13) According to Zapatero, the current focus of Spain's foreign policy is building closer ties to its European Union partners, particularly France and Germany, while still retaining good relations with the United States. Spain's newleaders say they will push forward more vigorously with EU integration. Zapatero's supporters say this policy willbein line with the foreign policy pursued by Spain in the post-Franco era, which they view as being based on a broadpublic consensus, as opposed to the allegedly autocratic style of Aznar. On the other hand, as in the cases of France and Germany, which have also had difficulties with Washington,damageto U.S.-Spanish relations may be limited by common interests, including the fight against terrorism. In September2004, Spain's attorney general announced that Spain and the United States plan to sign an agreement by the end of2004 under which prosecutors from both countries could share information about Islamic militants. Both theNationalIntelligence Reform Act ( S. 2845 ) and the 9/11 Recommendations Appropriations Act ( H.R. 10 ) call for closer international cooperation in the fight against terrorism, including by eliminating terroristsanctuariesand curtailing terrorist financing. A question for the future is the use of U.S. military bases in Spain. The Administration was easily able to secure theuse of U.S. bases in Spain for the Iraq operation. The bases played a significant role in the delivery of men andmateriel to the Iraqi theater. Given the criticisms by Spain's new leaders of the concept of what they view as a U.S.policy of "preventive war," it might be more difficult to secure Spanish permission to use the bases in futureoperations, especially if the action did not have prior U.N. Security Council approval. 1. (back) Leslie Crawford and Joshua Levitt, "APlace in the History of Infamy -- How the Government's Assumption andMisjudgement Shook Spain," Financial Times , March 26, 2004, 15. 2. (back) AP/Ipsos poll, March 5, 2004. 3. (back) Lizette Alvarez and Elaine Sciolino,"Parsing Spain's Result: Many Voters Felt Misled," New York Times , March18, 2004, 1. 4. (back) El Pais newspaper website, http://www.elpais.es . 5. (back) Neomi Ramirez and Luis F. Fidalgo,Elecciones Generales 14-M. Resultados. Evolucion del Voto, El Mundo ,March 16, 2004, p. 17. 6. (back) "Spanish Socialists Ten Points Ahead inFirst Post-Election Poll," Agence France Presse , March 22, 2004. 7. (back) "Spanish Politicians Rebuff U.S.Accusations of Appeasement," Associated Press , March 18, 2004. 8. (back) Pablo Pardo, "The Spanish Disposition," The Weekly Standard , March 29, 2004. 9. (back) Robin Wright and Bradley Graham, "SpainPlans to Hasten Withdrawal of Troops," Washington Post, April 22,1004, 25. 10. (back) For more on this issue see CRS Report RS21794 , Iraq Coalition: Public Opinion Indicators in Selected EuropeanCountries , by [author name scrubbed]. 11. (back) John Diamond, "Zapatero Wants toAlter War on Terror," USA Today , March 22, 2004, 13. 12. (back) Keith Richburg, "Spain's Next PrimeMinister Says U.S. Should Dump Bush," Washington Post , March 18, 2004,23. 13. (back) "Zapatero Comments on Iraq DrawU.S. Demand for Clarification," Agence France Presse , September 14, 2004.

This report discusses the March 11, 2004 terrorist attacks in Madrid,Spain and their impact on Spain's March 14 parliamentary elections, which resulted in the surprise victory of theSocialist Party over the ruling right-of-center Popular Party. The report also examines some of the possibleimplications of the attacks and the elections for the U.S.-led coalition in Iraq, the war on terrorism and U.S.-Spainrelations. This report will be updated as warranted. See also CRS Report RS21794 , Iraq Coalition: PublicOpinionIndicators in Selected European Countries , by [author name scrubbed].

Under CSRS, the surviving spouse of a federal employee who dies after having completed at least 18 months of service is eligible for an annuity, provided that the couple had been married for at least nine months or that the survivor is the parent of a child born of the marriage. The nine-month requirement is waived if the worker's death was accidental. A divorced spouse of a federal employee may be eligible for a survivor benefit if the employee elected a survivor annuity for the former spouse or under a state court decree of divorce, annulment, or separation. The survivor annuity under CSRS is 55% of the retirement benefit that the deceased employee had accrued at the time of death, but without any reduction for being under the age of 55. The annuity is guaranteed to be no smaller than 55% of the lesser of (1) 40% of the average of the employee's highest three consecutive years of pay or (2) the annuity that would result from projecting the employee's years of service to age 60. If an employee participating in FERS dies after having completed at least 18 months of service, but fewer than 10 years of service, his or her spouse is eligible for a lump-sum survivor benefit equal to one-half of the employee's annual basic pay plus a lump sum payment (approximately $31,768 in 2014). This benefit can be paid as a single lump-sum, or in equal installments over 36 months (with interest) at the option of the surviving spouse. If the employee had at least 10 years of service, the spouse receives a lump sum and an annuity equal to 50% of the retirement annuity that the deceased employee had earned at the time of his or her death. Survivor annuities under CSRS and FERS terminate if the surviving spouse remarries before the age of 55 (unless the marriage to the federal employee lasted at least 30 years). If the subsequent remarriage ends in death, divorce, or annulment, the annuity restarts in the same amount. Under CSRS, a monthly annuity is paid to the surviving children of a deceased employee, as long as they are under the age of 18 and not married, or under age 22 if still in school. A child survivor enrolled full-time in school and whose 22 nd birthday occurs before July 1 or after August 31 can continue to receive benefits while enrolled as a student through the following July 1. A surviving child is eligible for benefits regardless of age if he or she is incapable of self-support because of a physical or mental disability incurred before the age of 18. If a deceased federal employee is survived by a spouse or former spouse who is the biological or adoptive parent of the employee's surviving child(ren), each child receives the smallest of these three annual amounts: 60% of the employee's high-3 average pay, divided by the number of children, $6,024 (in 2014, indexed annually to the Consumer Price Index), or $18,072 (in 2014, also indexed to the CPI) divided by the number of children. In most cases, the benefit will be $6,024 per year (indexed to the CPI). If the deceased employee is not survived by a spouse or former spouse who is the biological or adoptive parent of the surviving child(ren), then each child receives the smallest of these amounts: 75% of the employee's high-3 average pay, divided by the number of children, $7,224 (in 2014, indexed annually to the Consumer Price Index), or $21,684 (in 2014, also indexed to the CPI) divided by the number of children. In most cases, the benefit will be $7,224. If a married couple dies, both of whom were federal employees covered by CSRS, each child is eligible for two survivor annuities. Children of deceased federal employees who were covered by FERS may be eligible for Social Security benefits, according to the laws governing that program. If the benefit that the children would have received under CSRS would have been greater than the Social Security benefit alone, FERS will pay a monthly benefit that in combination with Social Security will equal the CSRS benefit. In most cases, however, the Social Security benefit alone will exceed the benefit that would have been payable under CSRS. Nevertheless, because Social Security survivor benefits end when a child reaches the age of 18 (or 19 if the child is still in high school), FERS pays a benefit equal to a CSRS benefit for as long as the child is unmarried, under age 22, and enrolled full-time in post-secondary education. Widows, widowers, and unmarried dependent children under the age of 22 who survive a deceased federal employee who was enrolled in the Federal Employees' Health Benefits Program (FEHBP) may continue to participate in that program at the same cost as a federal employee if, prior to the employee's death, these individuals were covered as family members under the plan. If the employee's death resulted from an injury sustained in the performance of duty, the employee's surviving spouse and children are eligible for compensation equal to a percentage of the employee's monthly pay. This compensation is not payable concurrently with a survivor annuity under either CSRS or FERS. A survivor who is entitled to both an annuity under CSRS or FERS and to survivor compensation must elect one of the two benefits. The compensation payable to a surviving spouse if there are no children is equal to 50% of the deceased employee's final pay. If there are surviving children in addition to the spouse, the compensation is equal to 60% of pay if there is one child and 75% of pay if there are two or more children. If there are surviving children but no surviving spouse, the compensation is equal to 40% of pay for one child plus 15% of pay for each additional child, not to exceed 75% of pay. If an employee who was killed while performing his or her duty left no surviving spouse or children, compensation equal to 25% of pay may be paid to one parent if he or she was wholly dependent on the employee. Compensation of 20% of pay may be paid to each parent if both were wholly dependent on the employee. If the employee is survived by a spouse or children, then benefits are paid to the parents on a pro-rated basis so that the total does not exceed 75% of pay. If an employee who was killed while performing his or her duty left no surviving spouse, children, or dependent parents, compensation equal to 20% of pay may be paid to a brother, sister, grandparent, or grandchild who was wholly dependent on the employee. If more than one such person was dependent, compensation of 30% of pay may be paid and divided equally among them. If one or more were partly dependent on the employee, compensation equal to 10% of pay may be paid and divided equally among them. If the employee is survived by a spouse, children, or dependent parent, then benefits are paid to the brothers, sisters, grandparents, or grandchildren on a pro-rated basis so that the total does not exceed 75% of pay. The compensation for a surviving spouse is paid for life, unless he or she remarries before the age of 55. The compensation paid to a surviving child, brother, sister, or grandchild is paid until the individual marries, reaches age 18 (unless he or she is a full-time student), or if over age 18 and incapable of self-support, until the person is no longer incapable of self-support. The compensation paid to a parent or grandparent is paid for life, or until the individual marries or ceases to be dependent. The maximum monthly pay on which survivor compensation is based cannot exceed 75% of the maximum basic pay for level GS-15 of the general schedule. The government may pay this compensation as a lump-sum equal to the present value of all future payments if the monthly payment would be less than $50, if the beneficiary is about to become a nonresident of the United States, or if the Secretary of Labor deems it to be in the best interest of the beneficiary to do so. The surviving spouse or representative of an employee killed in the performance of his or her duty will be paid the sum of $200 as reimbursement for the costs of terminating the decedent's status as a federal employee and a sum not to exceed $800 for funeral and burial expenses. If the employee's death occurred away from home, the Federal Employees' Compensation Fund will pay the expenses related to transporting the decedent's body to his or her last place of residence. Section 651 of P.L. 104-208 authorizes payment of up to $10,000 to be made by the head of a federal agency at his or her discretion to the executor of the estate of a federal employee who dies as the result of an injury sustained while on active duty on or after August 2, 1990. The $200 payment for administrative expenses and the $800 payment for funeral expenses described above count against the $10,000 payment authorized by P.L. 104-208 . Married federal employees who retire under either CSRS or FERS automatically receive a joint and survivor annuity unless both husband and wife decline it in writing, in which case the worker will receive a single-life annuity . Under CSRS, if a worker receives a joint and survivor annuity, the annual benefit is reduced by an amount equal to 2.5% of the first $3,600 plus 10% of the annuity above that amount. In return for this reduction, the worker's spouse is entitled to a survivor annuity equal to 55% of the worker's full annuity before the reduction is taken into account. Alternatively, a worker retiring under CSRS and his or her spouse can elect a smaller survivor annuity, in which case the worker's annuity is reduced by 2.5% of the first $3,600 and 10% of the annuity above this amount, up to the limit that he or she specifies as the base upon which the survivor benefit is to be calculated. Under FERS, if a worker receives a joint and survivor annuity, the retiree's annual benefit is reduced by an amount equal to 10% of the annuity that would otherwise be paid. In return for this reduction, the worker's spouse is entitled to a survivor annuity equal to 50% of the worker's full annuity before the reduction is taken into account. Alternatively, the couple may elect that the survivor benefit is to be based on one-half of the retiree's annuity, in which case the retired worker's annuity is reduced by 5% and the survivor benefit would be equal to 25% of the retiree's unreduced annuity. The reduction in the benefits of workers who elect a joint and survivor annuity is sufficient to cover only about half of the cost of the FERS survivor annuity and less than half of the cost of the CSRS survivor annuity. Consequently, survivor benefits under both CSRS and FERS are partially subsidized by the federal government. If the marriage of a retiree who had elected a joint and survivor annuity ends, his or her annuity is increased to the full amount payable under a single-life annuity. If the retired worker marries or remarries after retirement, he or she has a maximum of two years during which to elect survivor coverage for a new spouse, and the retiree's annuity is reduced accordingly. The election for a joint and survivor annuity must be made within two years of the date of marriage. To elect survivor coverage for a spouse married after the date of retirement, a lump-sum payment (plus 6% interest) must be made to cover the period preceding the post-retirement marriage during which no survivor reduction was in effect. This payment is necessary to preserve equity between couples who are married continuously throughout retirement and those who marry after retiring, because in both cases the survivor benefit is the same percentage of the retired worker's annuity. Under both CSRS and FERS, survivor benefits are paid to children of deceased federal retirees in the same amounts and under the same eligibility criteria as apply to the children of deceased federal employees. Retired workers who are the parents of unmarried dependent children who might qualify for child survivor benefits are not required to take a reduction in their retirement annuities. A widow or widower of a deceased retiree who is eligible for a survivor annuity under either CSRS or FERS and who was covered under the FEHBP at the time of the retiree's death can continue to participate in the program at the same cost as applies to workers and retirees. The survivor is eligible even if the amount of the survivor annuity is less than the monthly FEHBP premium, in which case the individual must remit the difference directly to OPM. A retiree who marries or remarries after retirement can assure that his or her surviving spouse will be eligible for FEHBP coverage by electing a minimal survivor annuity. If a retired federal employee has a former spouse to whom a full survivor annuity was awarded through a state court order, the worker can at retirement (or at the time of remarriage, if later) entitle his or her current spouse to continue participating in the FEHBP after the retiree's death by electing survivor coverage for that spouse even though the current spouse might receive no survivor annuity as long as the former spouse is living and receiving the survivor annuity. Unmarried dependent children of a deceased retiree can continue to participate in the FEHBP until age 22, regardless of student status, provided that they were covered as family members by the retiree. In certain cases, coverage can continue for up to 36 months beyond the child's 22 nd birthday. Both CSRS and FERS allow a retiring employee to provide survivor benefits to an individual who has an "insurable interest" in the retiree. An insurable interest exists if the person may reasonably expect to benefit financially from the retiree continuing to live. For example, a former spouse or a current spouse can be named as having an insurable interest if a spouse survivor benefit has been provided for one or the other. A retiree who provides survivor benefits for someone with an insurable interest has his or her annuity reduced by 10% plus 5% for each full five years by which the named beneficiary is younger than the retiree. The total reduction may not exceed 40%. Under both CSRS and FERS, the survivor benefit paid to the named beneficiary is 55% of the retiree's reduced annuity, payable upon the death of the retiree. Federal employees are fully "vested" in (entitled to) a retirement annuity after completing five years of service. Vested employees who resign from federal employment before they are eligible to retire can defer receipt of their benefits until they reach the age of eligibility. Under CSRS, a deferred annuity can begin no earlier than the age of 62. Under FERS, an unreduced deferred annuity can start at the age of 62 for those with 5 to 19 years of service, at 60 for those with 20 to 29 years of service, or at 56 (increasing to 57 for employees born in 1970 or later) for those with 30 or more years of service. A reduced deferred FERS annuity is available at the age of 55 for those with 10 or more years of service. If the former employee dies after having begun to receive a retirement annuity, the surviving spouse is eligible for a survivor annuity under the rules applicable to CSRS or FERS, as described above. If a former employee who had been covered under CSRS dies before reaching the age of 62 and commencing his or her deferred annuity, no survivor benefit is paid. Instead, the surviving spouse receives a refund of the employee's contributions to the Civil Service Retirement and Disability Fund. If the former employee was covered under FERS, the surviving spouse may elect to receive an annuity or a lump-sum payment. If a former employee dies before having begun to receive a deferred annuity, no child survivor benefits are payable (although they may be payable under Social Security). If the employee dies after beginning to receive a deferred annuity, the surviving dependent children are eligible for survivor benefits under CSRS or FERS, as described above. A cost-of-living adjustment (COLA) is made once each year in January to benefits paid under CSRS and FERS. Under CSRS, the COLA is equal to the percentage change in the Consumer Price Index in the calendar quarter ending in the previous September compared with the same quarter one year earlier. Under FERS, however, COLAs are limited any time that the annual increase in the CPI exceeds 2.0%. If the CPI rises by 2% or less, the FERS COLA is equal to the increase in the CPI. If the CPI rises by 2% to 3%, the FERS COLA is 2%. If the CPI rises by more than 3%, the FERS COLA is equal to the increase in the CPI minus one percentage point. By filing Form TSP-3, a participant in the Thrift Savings Plan (TSP) can designate a beneficiary or beneficiaries to whom the balance in his or her account will be distributed in the event of the employee's death. If no Form TSP-3 has been filed, the account balance will be distributed in order of precedence to (1) to a widow or widower, (2) to a child or children, (3) to a grandchild or grandchildren, (4) to surviving parents, (5) to an executor previously appointed by the employee, and finally to the next of kin according to the laws of the state in which the employee resided. Division B, Title I, Section 109 of P.L. 111-31 provides that, subject to certain limitations, the surviving spouse of a deceased Thrift Savings Plan participant can maintain in the TSP the portion of the decedent's account to which the surviving spouse is entitled.

Federal employees with permanent appointments may be eligible for retirement and disability benefits under either the Civil Service Retirement System (CSRS) or the Federal Employees Retirement System (FERS). Most federal employees initially hired into permanent federal employment on or after January 1, 1984, are covered by FERS. Employees hired before January 1, 1984, are covered by CSRS unless they chose to switch to FERS during open seasons held in 1987 and 1998. Both FERS and CSRS provide survivor benefits for spouses and dependent children of employees and retirees. Survivors who had been participating in the Federal Employees' Health Benefits Program (FEHBP) can continue to do so. The federal government pays compensation to dependent survivors of federal civilian employees who are killed while performing their duties; however, a survivor eligible for both an annuity under CSRS or FERS and for survivor compensation cannot receive both.

Four decades have passed since the first trans-oceanic supersonic passenger flight took off from London Heathrow Airport in 1976. Subsequently, more than 2.5 million passengers flew supersonically until British Airways and Air France took the Concorde out of service in 2003. Although no su personic passenger aircraft have flown since then, aviation enthusiasts, aircraft and parts manufacturers, airlines, and some Members of Congress have expressed interest in restarting supersonic air travel. Several U.S. startup companies are now developing supersonic commercial and business jets. The major issues affecting the introduction of supersonic aircraft appear to remain the same as in the Concorde era--how to translate technological advances into commercial ventures that are economically viable and acceptable to regulators and the public. Gaining international consensus and approvals to fly supersonically over other countries besides the United States may be a critical element in determining the market viability of future civil supersonic aircraft designs. International agreements would also need to address permissible conditions for supersonic flight operations over water and over polar regions that have opened up to civil aircraft operations over the past decade and offer shorter flights between the United States and Asia. Supersonic flight means flight that is faster than the speed of sound. The speed of sound in Earth's atmosphere varies depending on temperature and other atmospheric conditions. Near sea level, it is typically about 760 miles per hour (mph). At the cruising altitude of commercial aircraft, where the air is much colder, it is often less than 700 mph. The ratio of an aircraft's speed divided by the speed of sound is known as its Mach number All current commercial aircraft are subsonic, with Mach number less than 1. For example, the typical cruising speed of a Boeing 777 airliner is Mach 0.84. Flight near Mach 1 is called transonic. Aircraft typically fly at such speeds only briefly while they accelerate from subsonic to supersonic or vice versa. They do not cruise near Mach 1 because they would experience high drag. Supersonic flight is faster than Mach 1. The Concorde cruised at about Mach 2.02 (roughly twice the speed of sound) when not over land. Some military aircraft fly at even higher supersonic speeds. Flight faster than Mach 5 is known as hypersonic. Hypersonic flight is currently limited to experimental aircraft and missiles as well as spacecraft reentering the atmosphere from orbit (the space shuttle during reentry flew at about Mach 25). As an aircraft flies, it disturbs the air through which it moves. The disturbance includes air flow around the aircraft as well as traveling pressure waves that humans perceive as sound. In subsonic flight, sound waves may be emitted in all directions. In supersonic flight, because the aircraft is flying faster than sound travels, all disturbances are behind the aircraft. Instead of sound waves, the pressure waves combine to form a shock wave, which people on the ground perceive as a sudden sonic boom after the aircraft passes (see Figure 1 ). Boom-related environmental impacts and community objections have been major issues for supersonic flight. Companies and government research programs are attempting to address these concerns by designing aircraft so that the shock waves produced by different components (such as the nose, wings, and engine) spread out in space and time, producing a longer but quieter "thump" rather than combining into a single loud boom. Flying faster than the speed of sound is not a novel concept. In 1947, a U.S. Air Force experimental aircraft became the first manned aircraft to exceed Mach 1, breaking the "sound barrier." This represented an important milestone for the burgeoning post-World War II aviation industry and set the stage for fierce international competition for speed and prestige. Notable supersonic developments include the Mach 2 British/Franco Concorde supersonic aircraft and the Mach 3.3 Lockheed SR-71 reconnaissance aircraft. While early research and development focused on military aircraft, by the early 1960s interest in developing supersonic civil aircraft grew worldwide. The Soviet Union became the first country to fly a supersonic passenger plane, the Tupolev TU-144, in 1968. The aircraft, which was designed to fly at Mach 2.2 and carry 140 passengers, went into production in 1972. However, a fatal crash at the 1973 Paris Air Show ended the Soviet Union's supersonic passenger ambition. In the United States, the supersonic technology developed in military aircraft programs led to interest in developing a supersonic transport for civilian applications. In June 1963, the government announced a major program to develop a supersonic passenger aircraft under the direction of the Federal Aviation Administration (FAA). However, several serious problems soon surfaced, including the need for considerable federal funding because of a development cost beyond the capabilities of any aircraft manufacturer, the lack of interest by the airlines due to their heavy investment in subsonic jets and their doubts about the financial viability of supersonic passenger aircraft, and the major challenges of addressing environmental concerns. The FAA program was eventually terminated by Congress in 1971, amid delays in prototype development and opposition on cost and environmental grounds. The Franco-British Concorde was the product of a costly joint project of the British and the French governments. In January 1976, the first flight of the Concorde, also the world's first trans-oceanic supersonic passenger flight, took off from London Heathrow to Bahrain. More than 2.5 million passengers flew supersonically before Concorde was taken out of service in 2003. With a cruising altitude of about 65,000 feet (nearly twice as high as subsonic airliners) and a speed of over twice the speed of sound, a typical journey between London and New York on the Concorde took about three and a half hours, as opposed to about seven hours on a subsonic nonstop flight. Although the Concorde was considered an aeronautical achievement and a symbol of national prestige by many, it did not turn out to be a commercial success for a variety of reasons. As a government endeavor, the Concorde was a very costly project. Although there has not been an accurate accounting of the costs, it was argued in 1976 that the official figure of PS1.46 billion had been a drastic underestimate, and that the program cost of Concorde was nearly PS4.26 billion. This was approximately PS29.15 billion in 2017 pounds, equivalent to about $37.52 billion in U.S. dollars. Concorde aircraft were also expensive to operate, reportedly using almost three times as much fuel per passenger mile as subsonic aircraft. This drove up operating costs considerably, especially during the period of high oil prices in the 1970s and early 1980s. High subsonic noise levels during takeoffs and landings and sonic boom impacts from cruise flight generated considerable concern. Many countries banned Concorde flights from their airspace--it was reported that nearly half the planned routes, especially those over land, were prohibited. U.S. civil aviation regulations did and still do prohibit overland supersonic flights in the continental United States. This contributed to Concorde's low utilization rate and effectively limited its flights to a limited number of oceanic routes between big cities, including scheduled trans-Atlantic flights between London and New York. Providing premium air travel on selected routes, however, failed to make Concorde flights a sustainable business. Even as the development costs of the Concorde were written off by the British and French governments, few airlines were interested in purchasing a Concorde aircraft. Of the 20 Concordes ever manufactured, 14 were sold to the state-owned carriers of the two countries involved in building the planes: seven to British Airways and seven to Air France. The remainder were built as prototypes and flight test aircraft. All other orders for the Concorde were canceled. Filling the seats on Concorde flights with paying customers was not easy. Concorde tickets were generally priced at about twice the regular first-class airfare on a comparable subsonic flight. For example, in 2003, a round trip across the Atlantic on the Concorde cost PS8,000, equivalent to about $15,475 in 2017 U.S. dollars, almost twice the first-class ticket price on a Boeing 747. Once the attraction of novelty wore off, the airlines found it difficult to fill the seats, often flying at less than half capacity. The plane was also impractical for carrying cargo or mail, given the limited cargo space on the Concorde. The airlines were therefore unable to generate additional revenue from these sources, which are important supplemental revenue streams for subsonic transoceanic passenger flights. According to figures from the British government, during the first five years of Concorde operations, British Airways recorded a loss of PS10.4 million and Air France a loss of PS36.7 million. However, the airlines claimed that in some years the SST operations were profitable. This occasional profitability was based on the fact that Concorde's development and capital costs were absorbed by the British and the French governments. In essence, the Concorde was too expensive for the airlines to operate and maintain with consistent profitability, even though they bore none of the cost of designing and building it. On July 25, 2000, Air France New York-bound flight 4590 took off from Charles de Gaulle airport in Paris. During the take-off acceleration, one of the tires ran over a strip of metal on the runway that had fallen from a previous aircraft. The metal strip shredded the tire. Part of the rubber hit a fuel tank, sending shock waves that burst a valve. Fuel started to pour out and was ignited by sparks from the landing gear damaged by the debris. The aircraft crashed into a hotel in the village of Gonesse, five miles from the runway. All 100 passengers and nine crew members were killed, along with four hotel employees on the ground. This sole fatal accident in the Concorde's operational history generated significant media coverage and damaged the Concorde's reputation for safety. Following the crash, safety modifications were made. The first test flight of a modified aircraft was completed successfully in July 2001. The first regular Concorde passenger flight after the accident soon followed, on September 11, 2001. That was also the day that terrorist hijackers used civilian aircraft to attack the Pentagon and the World Trade Center. The 9/11 terrorist attacks caused a significant drop in demand for air travel in general and for premium air travel in particular amid a global economic downturn. In 2003 all Concorde flights were discontinued due to financial losses. The Concorde demonstrated that supersonic passenger travel was technically achievable. But it was not financially successful. A new SST will be commercially viable only if it can offer transportation services at reasonably competitive prices in addition to reducing travel time for passengers over long routes. A supersonic aircraft may gain some advantage from its so-called "speed dividend"--commercial airlines with scheduled flights, charter carriers, and operators of on-demand and business jets would be able to get more trips out of the aircraft, and hence greater asset utilization. However, the speed dividend can be achieved only if the airline can maintain a high load factor while keeping maintenance and ground turnaround time brief. A supersonic airplane designed for commercial passenger service would face competition from subsonic planes. Modern subsonic widebody aircraft such as the Airbus A 350 and Boeing 787 are able to fly very long distances nonstop, such as the Singapore-Newark route spanning 8,285 nautical miles (about 9,534 miles, or 15,343 kilometers), which Singapore Airlines inaugurated in October 2018. An airline offering SST service would need to identify a city pair between which there are enough passengers willing to pay a high enough fare to turn a profit. It will need to convince its customers that the fare premiums are worth the time saved and worth sacrificing the presumed comfort in premium cabins on competing subsonic flights. On the other hand, the fact that modern subsonic aircraft are able fly very long distances means flight time gets extended as well, suggesting there could be demand for higher-priced flights offering much shortened travel time. As air travel becomes increasingly commoditized and generic, supersonic flights could be a unique service that would enable an airline to differentiate itself from the crowd. There may be an entirely separate market for supersonic business jets. Many large corporations fly their top executives aboard private aircraft for security reasons and to minimize wasted time. Supersonic planes could be attractive for this purpose. Several companies (such as NetJets and Flexjet ) offer fractional ownership of general aviation aircraft, a shared-ownership model similar to the time-share model in real estate, which would allow potential users to gain access to supersonic flights at considerably lower cost than full ownership. Speed is the main attraction of supersonic flight. Due to air traffic constraints, supersonic aircraft would not likely be able to achieve meaningful time savings for flights less than about 800 nautical miles (roughly the distance between New York and Orlando, FL). However, if supersonic flights over land are allowed, flying supersonically could save travelers about one hour on a flight between New York and Los Angeles, for example. Even greater time savings can be achieved on longer flights, but this is constrained by the range of the aircraft (see Figure 2 ). Companies currently developing SSTs have stated that they envision flight ranges of about 4,000 to 6,000 nautical miles. These ranges would comfortably allow for flights between much of the east coast of the United States and key European destinations like London and Paris, with typical time savings of around two hours. However, several trans-Pacific routes, routes from western U.S. cities to Europe, and flights from the United States to Africa or the Middle East would require refueling stops. Developers envision that, even with hour-long service stops to take on fuel, the time savings could be substantial, typically cutting about one-third off of total travel time. The revival of interest in supersonic aircraft is the result of technological advances in materials, airframe and engine designs, and aircraft manufacturing that would be able to give the aircraft longer range through improved fuel efficiency and substantial weight savings with advanced composites and aerodynamics. Denver-based Boom Technology has announced plans to test a supersonic 2-seat demonstrator by the end of 2019, and aims to deliver its first supersonic aircraft to an airline as early as 2025. In November 2016, Virgin Group, an airline operator, took purchase options for 10 of Boom's proposed Mach 2.2 aircraft. Japan Airlines (JAL) invested $10 million in Boom and took purchase options on 20 planes in December 2017. In early 2018, Qatar Airways reportedly expressed interest in supersonic airliners and said it "would not hesitate to be the launch customer." Nevada-based Aerion Supersonic and Boston-based Spike Aerospace are focusing on smaller jets for private use. In December 2017, Aerion announced a joint venture with Lockheed Martin and GE Aviation, an engine manufacturer, to develop a supersonic business jet, the AS2. The development of supersonic aircraft faces considerable regulatory uncertainty. Because the commercial viability of SSTs will depend on their ability to fly internationally, production of supersonic planes for passenger service is unlikely until the United States and other countries have adopted similar standards. Two types of standards are at issue Certification standards pertain to the aircraft itself. At present, there are no agreed-upon international standards for next-generation supersonic aircraft. Current noise standards applicable to new civil aircraft have evolved over the years to reflect existing technology used by subsonic aircraft. Existing standards applicable to supersonic aircraft, however, are now obsolete because they apply only to the Concorde or aircraft with Concorde-type design. The International Civil Aviation Organization (ICAO) Committee on Aviation Environmental Protection is presently seeking to develop international noise and emissions standards for future supersonic aircraft. ICAO has indicated that it anticipates reaching a standard for certifying supersonic aircraft in the 2020-2025 timeframe. Operational standards pertain to the way an aircraft may be used. Noise standards in the United States and other countries, dating to the early years of the Concorde, prohibit supersonic flight over land. FAA standards prohibit the operation of an aircraft at supersonic speed unless the aircraft is entering or leaving the United States and will not cause a sonic boom to reach the surface, or unless the operation involves a test flight authorized by FAA. Similarly, Japanese law prohibits "extremely high speed flights" over densely populated areas and around airports without specific permission. Aviation authorities will also need to address operational parameters for supersonic flight over water and polar regions on an international basis. Provisions in the FAA Reauthorization Act of 2018 ( P.L. 115-254 ) require FAA, within one year of the bill's enactment (October 5, 2018), to submit a report to Congress with recommended regulatory changes on a timeline that would permit overland supersonic flights. The FAA Reauthorization Act of 2018 directs FAA to take a leadership role in creating federal and international policies, regulations, and standards to certify safe and efficient civil supersonic aircraft operations within U.S. airspace. The legislation requires FAA to consult with industry stakeholders on noise-certification issues, including operational differences between subsonic and supersonic aircraft. It requires FAA to issue a notice of proposed rulemaking (NPRM), no later than December 31, 2019, to revise Part 91 Appendix B regulations to modernize the process for applying to operate civil aircraft at supersonic speeds for flight testing. It further requires FAA to issue an NPRM, no later than March 31, 2020, to develop noise standards for sonic boom over the United States and for takeoff and landing and noise test requirements applicable to civil supersonic aircraft, and to publish the final rule within 18 months after the public comment period closes. However, FAA may have to move more quickly: if an application for Part 21 certification of a supersonic aircraft is received before the final rule is promulgated, FAA must issue an NPRM no later than 18 months after the submission applicable solely to type certification of that aircraft and its engine. Furthermore, beginning December 31, 2020, and every two years thereafter, FAA would be required to review available aircraft noise and performance measurements to determine if federal regulations should be amended to remove the current ban on civil supersonic flight over land. The principal regulatory concern surrounding supersonic aircraft is the sonic boom, a shock wave of pressure created by compression of sound waves as the air is displaced by the airframe traveling at or above Mach 1.0. The compressed air molecules form a cone that spreads out from the aircraft and can reach the ground. If these sudden pressure changes reach the ear they will be perceived as booms, similar to the clap of thunder. The intensity of the boom will depend on the shape, size, and weight of the aircraft, as well as atmospheric factors such as wind, temperature, and humidity. Like explosions and other impulsive sounds, sonic booms are measured in terms of the increase in pressure (or "overpressure") they produce compared to normal pressure of the atmosphere (nominally 14.7 pounds per square inch, or 2,116 pounds per square foot). Humans may tend to find sonic boom overpressures above 1 pound per square foot to be objectionable. Overpressures of 1 to 2 pounds at the surface are typical of current-day supersonic aircraft, including military fighter jets and the retired Concorde supersonic jetliner, flying at typical cruise altitudes of 30,000 to 50,000 feet. Maneuvering during supersonic flight or rare atmospheric anomalies may cause higher boom overpressures to reach the surface. Higher overpressures may increase the likelihood of public reaction and, in very rare instances, may cause physical discomfort and break windows. Current regulations prohibit civil aircraft from operating at speeds greater than the speed of sound in U.S. airspace. Exceptions can be authorized on a case-by-case basis, and are generally requested for flight testing of military aircraft types by manufacturers and other civilian organizations supporting Department of Defense flight testing programs. In addition, manufacturers of certain civilian aircraft may petition FAA to obtain authorization to exceed the speed of sound in flight testing. In such a petition, applicants must specify a designated test area, usually over sparsely populated lands, and must demonstrate that the purpose of the flights is for testing to show compliance with aircraft certification requirements, to determine the sonic boom characteristics of the aircraft or establish means to reduce or eliminate the effects of sonic boom, or to establish the parameters under which the aircraft's supersonic flight will not cause measurable sonic boom impacts on the ground. In rare cases, FAA may approve supersonic flights outside of a designated test area if the petitioner can demonstrate that the flights will not produce measurable sonic boom overpressures that reach the ground under all foreseeable operating conditions. Manufacturers are likely to seek authorization to operate at supersonic speeds over land. The Federal Interagency Committee on Aviation Noise (FICAN) has indicated that, in order to obtain such authorization, a manufacturer will need to demonstrate either that the aircraft is capable of flying at supersonic speeds without its sonic boom reaching the ground (a capability known as Mach cut-off flight) or that the sonic boom impact on the ground is significantly attenuated compared to existing supersonic aircraft designs. The companies now developing supersonic aircraft believe that they will be able to demonstrate Mach cut-off capabilities or sonic boom signatures that are much quieter and much more acceptable to the public than existing supersonic aircraft. Aerion Supersonic claims its plane will demonstrate a "boomless cruise" at speeds approaching Mach 1.2, depending on atmospheric conditions. The company expects that cruise speeds over land will initially be restricted to below Mach 1.0, and advertises that its plane's envisioned subsonic cruise speed of Mach 0.95 will be faster than current commercial jets and will not produce a sonic boom. The projected maximum speed over water is Mach 1.4, about 65% faster than a typical long-range jet airliner. Aerion has had to throttle back on its speed expectations due to noise and heat limitations of existing engine designs. Spike Aerospace anticipates that its Spike S-512 will be able to achieve a supersonic cruise speed of Mach 1.6 with a sonic boom having a perceived loudness of less than 75 decibels (dB) at ground level. Boom Technology seeks to produce a three-engine airliner that will be capable of cruise speeds of Mach 2.2 but will be 30 times quieter than the Concorde at supersonic speed. None of the companies has publicly disclosed the designs and materials that would allow their planes to operate at supersonic speeds with relatively low noise levels. The National Aeronautics and Space Administration (NASA) Low Boom Flight Demonstrator program is developing the experimental X-59 QueSST (Quiet Supersonic Transport). Delivery of the X-59 is expected in 2021, with test flights planned during 2022. The aircraft is designed to fly at Mach 1.42 while producing a sonic boom with a perceived loudness of 75 dB Comparable to a domestic vacuum cleaner, this would be much less than the Concorde's perceived loudness of 105 dB (comparable to a thunderclap or a loud sports stadium). The nose, wings, engine, and other components of the X-59 will be shaped and positioned so that the individual shock waves they produce do not combine to produce a single loud boom. Instead, they will be spread out in space and time to produce a longer but quieter "thump." A ground-level sonic boom measurement of 75 dB perceived noise level (PNLdB) has been suggested by some NASA researchers as a potentially acceptable level for unrestricted supersonic flight over land. However, no standard has been established, either in the United States or internationally, and FAA has noted that its ongoing rulemaking efforts to address subsonic noise limits for supersonic aircraft would not rescind the prohibition of flights in excess of Mach 1 over land. However, language in P.L. 115-254 will require FAA to periodically review existing restrictions on supersonic flight of civil aircraft over land in the United States every two years, starting December 31, 2020. The reviews are to determine whether these restrictions may be eased to permit supersonic flight of civil aircraft over land. Controlling noise generated by supersonic jets during takeoffs and landings raises complex design tradeoffs, because making aircraft engines quieter at subsonic speeds may impact speed and efficiency in supersonic flight. Applying current subsonic noise standards to future supersonic aircraft could affect speed and range as well as aircraft emissions during supersonic phases of flight. FAA gave the Concorde special consideration with respect to noise certification, so long as developers demonstrated that the subsonic noise levels generated by the aircraft had been "reduced to the lowest levels that are economically reasonable, technologically practicable, and appropriate for the Concorde type design." The Concorde was noticeably louder during takeoff and landing than aircraft meeting ICAO's Stage 2 standards, which were established in 1971 as the original international limits for permissible aircraft noise. Only Concorde airplanes with flight time prior to January 1, 1980, were granted this special exception. However, as it turned out, no Concorde aircraft were produced after 1979. In 1976, the Port Authority of New York and New Jersey attempted to ban the Concorde from landing or taking off at John F. Kennedy International Airport (JFK), but a court found that this was preempted by an FAA decision allowing limited Concorde operations in the United States. While a complete ban against the Concorde was struck down by the court's decision, a curfew prohibiting scheduled Concorde flights between 10 p.m. and 7 a.m. was allowed. The United States completely phased out Stage 2 jets at the end of 2015, and those aircraft can no longer operate in U.S. airspace without special permission. Most jets today meet either Stage 3 or Stage 4 standards, which require much quieter engines. These standards, which vary based on aircraft weight, are known internationally as Chapter 3 and Chapter 4 noise standards in reference to the applicable chapters in ICAO Annex 16 (Environmental Protection), Volume 1 (Aircraft Noise). Newly designed aircraft certified after December 31, 2017, must meet U.S. "Stage 5" standards (internationally known as Chapter 14 standards, in reference to Chapter 14 of ICAO Annex 16). Stage 5 standards require aircraft to be at least 7 dB quieter than required by the previous Stage 4 noise standards, or 17 dB less than required by Stage 3 standards, cumulatively across three noise measurements (flyover, sideline, and approach). The sound produced by aircraft under the new standard will be on the order of one-fourth of the sound intensity of aircraft operating in the 1970s under Stage 2 noise limits. Many recent commercial jet models already meet the Stage 5 requirements, and in general, the subsonic commercial aircraft fleet is considered to be 75% quieter overall than aircraft produced in the 1970s. The Stage 5 standards apply to both commercial aircraft and general aviation aircraft such as business and private jets. Supersonic aircraft developers argue that the Stage 5 standard was finalized after significant design work on some new supersonic designs had already been completed, and, consequently, significant design changes may be required to pass noise certification tests, including changes that may substantially limit aircraft characteristics such as payload capacity and range. Some critics assert that requiring compliance with stringent Stage 5 noise standards may put supersonic designs at a competitive disadvantage while having little effect on reducing community noise around airports, as SSTs are likely to be produced in comparatively small numbers and subsonic Stage 3 and Stage 4 aircraft will continue to make up most of the air traffic around airports. At this point, aircraft manufacturers are generally employing higher bypass engines to achieve Stage 5 standards. These engines have large diameters, which can significantly increase drag and reduce fuel efficiency during supersonic flight. According to some studies, these engine designs could increase fuel consumption and carbon emissions by about 20% during supersonic flight. In addition, the increased wave drag of higher bypass engine designs is anticipated to reduce supersonic cruise speeds and aircraft range. FAA reauthorization language offered in the Senate ( S. 1405 , 115 th Congress) would have required that noise certification standards for future supersonic aircraft be no more stringent than standards that were in place for large subsonic aircraft on January 1, 2017. This would have had the effect of applying the Stage 4 noise standards in place on that date, and not the more stringent Stage 5 standards, to supersonic aircraft in development. This language was not included in the enacted FAA Reauthorization Act, thus leaving it to FAA to set appropriate noise limits as part of its mandated rulemaking activities to address noise certification of supersonic aircraft. U.S.-registered civil aircraft are required to meet airworthiness requirements that include, among other criteria, the FAA noise standards in 14 C.F.R. Part 36. FAA established Part 36, as well as additional operating standards applicable to aircraft noise, pursuant to the Control and Abatement of Aircraft Noise and Sonic Boom Act of 1968 (P.L. 90-411, as amended). That act required the FAA Administrator to prescribe standards and regulations to "afford present and future relief and protection to the public from unnecessary aircraft noise and sonic boom." FAA prohibited supersonic flights over land in 1973, based on the expectation that such flights would cause a sonic boom to reach the ground. FAA amended its operating standards in 1989 to allow for the authorization of supersonic flights in a designated test area if the flight is necessary to determine the sonic boom characteristics of an airplane or to establish means of reducing or eliminating the effects of sonic boom; or to demonstrate the conditions and limitations under which flight at supersonic speeds will not cause a measurable sonic boom overpressure to reach the surface. In 2008, FAA issued a statement updating its policy on noise limits for future civil supersonic aircraft to reflect then-current noise limits. The statement acknowledged that designers and prospective manufacturers of supersonic aircraft had approached FAA and ICAO for guidance on the feasibility of changing operational limitations that prohibited civil supersonic aircraft flight over land. In response, the agency stated, in part, Before the FAA can address a change in operational restrictions, it needs thorough research to serve as a basis for any regulatory decisions. Public involvement will be essential in defining an acceptable sonic boom requirement, and public participation would be part of any potential rulemaking process. While technological advances in supersonic aircraft technology continue, many factors still will need to be addressed. At present, the FAA's guidance for supersonic aircraft is the same as for subsonic, that the same noise certification limits apply for supersonic aircraft when flown in subsonic flight configurations . [Emphasis added.] The final policy statement notes FAA's expectation that any rulemaking affecting noise operating rules would propose that any future supersonic airplane produce no greater noise impact on a community than a subsonic airplane. Further, FAA stated that "noise standards for supersonic operation will be developed as the unique operational flight characteristics of supersonic designs become known and the noise impacts of supersonic flight are shown to be acceptable." Between 2009 and 2011, FAA held public meetings and solicited technical information from other federal agencies, industries, universities, and other interested parties on the mitigation of sonic boom from supersonic aircraft. According to FAA, it did so in an effort to determine whether there are sufficient new data supported by flight over land. On October 10, 2018, FAA announced it is initiating two rulemakings relevant to supersonic flights, one to amend domestic noise certification standards for supersonic aircraft and the other to update the operating standards applicable to supersonic flight testing. FAA anticipates issuing both proposed rules in 2019. FAA stated that the proposals are intended to streamline and clarify the procedures to obtain FAA authorization. According to FAA, neither of these two rulemaking activities would rescind the prohibition of flight in excess of Mach 1 over land. The potential success of supersonic aircraft likely hinges not only on U.S. certification and the ability to operate in U.S. airspace, but also on certification and operational acceptance of supersonic flight internationally. Noise certification standards and sonic boom are reportedly both points of contention between the United States and Europe. Following the legislative mandate in P.L. 115-254 requiring FAA to periodically review and amend as appropriate existing restrictions on supersonic flights over land beginning by 2021, there is likely to be mounting international pressure to develop consensus sonic boom standards through ICAO in a timely manner. Reportedly, "[t]here are concerns that a U.S.-only standard for sonic boom could be higher than NASA's 75 PNLdB target, which compares to the Concordes's 110 PNLdB, and could jeopardize public acceptance of supersonic travel." If other countries insist that supersonic aircraft meet Chapter 14/Stage 5 subsonic noise standards, engine options may be more limited, potentially impacting speed, range, and emissions characteristics of supersonic designs. Reportedly, efforts to move forward with international certification standards for supersonic aircraft are facing resistance from European nations that want the aircraft to adhere to strict noise guidelines, particularly for landing and takeoff phases of flight. Developers of supersonic aircraft have cautioned that a protracted debate to set international standards could delay progress on development, and FAA has urged agreement on standards as soon as practicable so that manufacturers can have certainty regarding certification requirements. Gaining international consensus and approvals to fly supersonically over other countries besides the United States may be a critical element in determining the market viability of future civil supersonic aircraft designs. International agreements would also need to address permissible conditions for supersonic flight operations over water and over polar regions. Polar flights may be a first step for future supersonic aircraft operations if supersonic flight over land is not immediately authorized. Polar airspace has become increasingly important to aviation as polar routes offering shorter flights between the United States and Asia have opened up to civil aircraft operations over the past decade. Approvals to fly at supersonic speeds along these polar routes and along transoceanic routes would generally fall under the purview of countries' delegated authority to oversee the management of airspace in these regions, pursuant to ICAO standards and guidelines. The United States has been delegated authority to oversee air traffic over large areas of the northern Pacific and northern Atlantic oceans and portions of the Arctic, while Canada, Iceland, and Russia control much of the airspace overlying the polar regions of the Arctic Circle under international agreement. As the main selling point of supersonic flight is speed, access to these time-saving international routes could be a critical factor in the potential commercial success of future civil supersonic aircraft.

It has been over 40 years since British Airways' first Concorde passenger flight took off in 1976. So far the Concorde is the only commercial supersonic passenger aircraft to travel at more than twice the speed of sound. It was a technological accomplishment but not a commercial success. In 2003, all Concorde aircraft were taken out of service. Recent years have seen a revival of interest in supersonic aircraft. Several startup companies are developing new supersonic commercial and business jets, hoping technological advances in materials, design, and engine efficiency will make it possible to produce commercially viable aircraft. The main regulatory issues related to supersonic flight remain unchanged from the Concorde era: limiting ground-level noise during subsonic flight and sonic booms during supersonic flight. Aircraft noise standards have become much stricter since the Concorde entered service, and the commercial aircraft fleet is considered to be 75% quieter overall than during the 1970s. However, some of the technical approaches used to reduce noise during subsonic flight may hinder efforts to reduce the magnitude of sonic booms in future supersonic aircraft. In the United States, the FAA Reauthorization Act of 2018 (P.L. 115-254) directs the Federal Aviation Administration (FAA) to take a leadership role in creating federal and international policies, regulations, and standards to certify safe and efficient civil supersonic aircraft operations. It requires FAA to consult with industry stakeholders on noise-certification issues, including operational differences between subsonic and supersonic aircraft. It also requires FAA to develop and issue noise standards for sonic boom over the United States and for takeoff and landing and noise test requirements applicable to civil supersonic aircraft. Furthermore, beginning December 31, 2020, and every two years thereafter, FAA will be required to review available aircraft noise and performance measurements to determine if federal regulations should be amended to remove the current ban on civil supersonic flight over land. Since new supersonic aircraft are expected to operate internationally, the lack of agreed-upon international standards or agreements is likely to hinder production as well as operations. FAA is already engaged with the International Civil Aviation Organization (ICAO) to develop certification standards for future supersonic aircraft, but this process to produce an international standard may not be completed until 2025. In addition, the United States and other countries prohibit supersonic flights over land except in limited circumstances, and changes in those restrictions may be necessary for supersonic aircraft to be commercially viable.

Congress uses an annual appropriations process to fund discretionary spending, which supports the projects and activities of most federal government agencies. The timetable associated with this process requires that the enactment of these regular appropriations bills occurs prior to the beginning of the fiscal year (October 1). If regular appropriations are not enacted by that time, continuing appropriations (often referred to as "continuing resolutions" or CRs) may be used to provide funding until the annual appropriations process has been concluded. A total of four CRs were enacted during the FY2014 appropriations process. No regular appropriations acts for FY2014 were enacted by the start of the fiscal year. A "narrow" CR to provide funds for certain Department of Defense (DOD) and Department of Homeland Security (DHS) activities in the absence of a "broad" CR or annual appropriations (the Pay Our Military Act; H.R. 3210 ; P.L. 113-39 , 113 th Congress) had become law. As a result, a funding gap commenced for affected projects and activities on October 1. During the funding gap, one additional CR was enacted (the Department of Defense Survivor Benefits Continuing Appropriations Resolution, 2014; H.J.Res. 91 ; P.L. 113-44 ), to provide appropriations for military death gratuities. After 16 full days, the funding gap was terminated on October 17 with the enactment of a "broad" CR that funded projects and activities funded in the previous fiscal year (the Continuing Appropriations Act, 2014; H.R. 2775 ; P.L. 113-46 ). This funding was to expire on January 15, 2014. To allow additional time to conclude the annual appropriations process, that funding was extended to January 18, 2014 (Making further continuing appropriations for fiscal year 2014, and for other purposes; H.J.Res. 106 ; P.L. 113-73 ). This report summarizes the components of the four FY2014 continuing resolutions. For information on the congressional consideration of FY2014 appropriations measures, including these four CRs, see CRS Report R43338, Congressional Action on FY2014 Appropriations Measures , by [author name scrubbed]. For general information on the content of CRs and historical data on CRs enacted between FY1977 and FY2014, see CRS Report R42647, Continuing Resolutions: Overview of Components and Recent Practices , by [author name scrubbed]. Table 1 summarizes the contents of the four FY2014 CRs with regard to their coverage, expiration, formula, anomalies, and estimated annualized amount of discretionary spending. C overage relates to the purposes for which funds are provided. The projects and activities funded by a CR are typically specified with reference to regular and supplemental appropriations acts from the previous fiscal year. When a CR refers to one of those appropriations acts and provides funds for the projects and activities included in such an act, the CR is often referred to as "covering" that act. The duration of a CR refers to the period of time for which budget authority is provided for covered activities. This duration is limited by an expiration date, which may occur prior to the close of the fiscal year ("temporary" or "interim" continuing appropriations), or may extend through the end of the fiscal year ("full-year" continuing appropriations). That expiration date may be superseded by the enactment of annual appropriations or a further CR. A formula is typically used by CRs to provide budget authority at a restricted level without prescribing a specific amount. The formula is used to calculate an annualized rate of budget authority for each project and activity. Alternatively, a continuing appropriations act may provide specific amounts for covered projects and activities in the text of the act, or by reference. Anomalies are provisions in a CR that designate exceptions to the duration, formula, or purpose for which any referenced funding or other authority is extended. The Congressional Budget Office (CBO) has estimated the annualized discretionary spending for FY2014 under these CRs using two different measures: "total regular appropriations" and "total spending." Total regular appropriations is an estimate of only the annualized discretionary budget authority that is subject to the Budget Control Act (BCA) discretionary spending limits. Total spending is an estimate of annualized discretionary budget authority that includes budget authority not subject to the discretionary spending limits because it was designated for the purposes of Section 251(b) of the Balanced Budget and Emergency Control Act of 1985 (Title II of P.L. 99-177 , 2 U.S.C. 900-922; BBEDCA). The contents of these four FY2014 CRs are discussed further in the subsections below. The first CR to be enacted for FY2014 was an "automatic" CR, meaning that it provided funding for specified activities that would become available automatically during a FY2014 funding gap, and expire when an applicable regular appropriations act or CR was enacted. This CR provided a mechanism to cover projects and activities in three different categories: (1) Pay and allowances to members of the Armed Forces (as defined in section 101(a)(4) of title 10, United States Code), including reserve components thereof, who perform active service during such period; (2) Pay and allowances to the civilian personnel of the Department of Defense (and the Department of Homeland Security in the case of the Coast Guard) whom the Secretary concerned determines are providing support to members of the Armed Forces described in paragraph (1); and (3) Pay and allowances to contractors of the Department of Defense (and the Department of Homeland Security in the case of the Coast Guard) whom the Secretary concerned determines are providing support to members of the Armed Forces described in paragraph (1). The duration of the budget authority that was provided by this mechanism began on October 1, 2013, due to the absence of enacted regular or continuing appropriations, and terminated on October 17, 2013, with the enactment of the Continuing Appropriations Act of 2014 ( P.L. 113-46 ). The formula for this mechanism provided FY2014 funds for each day of a funding gap at an indefinite level for all covered projects and activities (i.e., "such sums as are necessary"). There were no anomalies in this CR. No CBO cost estimate was issued while the measure was under consideration. The second CR for FY2014 was the Department of Defense Survivor Benefits Continuing Appropriations Resolution, 2014 ( H.J.Res. 91 ; P.L. 113-44 ), which was enacted on October 10, 2013. This CR provided funds to cover the following activities in the Department of Defense "Operation and Maintenance" and "Military Personnel" accounts: (1) The payment of a death gratuity under sections 1475-1477 and 1489 of title 10, United States Code. (2) The payment or reimbursement for funeral and burial expenses authorized under sections 1481 and 1482 of title 10, United States Code. (3) The payment or reimbursement of authorized funeral travel and travel related to the dignified transfer of remains and unit memorial services under section 481f of title 37, United States Code. (4) The temporary continuation of a basic allowance of housing for dependents of members dying on active duty, as authorized by section 403(l) of title 37, United States Code. The duration of funds under this CR began on October 10, 2013, and was to terminate on December 15, 2013, unless superseded by the enactment of a regular or continuing appropriations act. These funds were superseded by the enactment of P.L. 113-46 , on October 17, 2013. The funding formula for each covered project and activity was at the rate the projects and activities were funded in the previous year's appropriations act (the Department of Defense Appropriations Act, 2013; Division C of P.L. 113-6 ). This rate was calculated based on the amount of funding available for that project or activity under the terms of that act, including the effects of any provisions reducing FY2013 budget authority. The formula also included any reduction that applied to those FY2013 funds pursuant to the March 1 presidential sequestration order. There were no anomalies in this CR. According to CBO, the total amount of annualized budget authority for regular appropriations in this CR was $116 million. When spending was included in the calculation that was designated under Section 251(b) of the BBEDCA (for OCO/GWOT), the total CBO-estimated amount of annualized budget authority in the CR was $150 million. The third CR for FY2014 was the Continuing Appropriations Act, 2014 ( H.R. 2775 ; P.L. 113-46 ; hereinafter "the FY2014 CR"), which was enacted on October 17, 2013. This act superseded the funding provided under the two narrow FY2014 CRs. This CR broadly covered all 12 regular appropriations bills by providing budget authority for projects and activities funded in FY2013 by Divisions A-F of the Consolidated and Further Continuing Appropriations Act, 2013 ( P.L. 113-6 ; Hereinafter, "the FY2013 Consolidated Act"), with an exception. This included any FY2013 budget authority that was designated as for "Overseas Contingency Operations/Global War on Terrorism" (OCO/GWOT), "continuing disability reviews and redeterminations," "health care fraud abuse control," and "disaster relief," and thus exempt from the statutory discretionary spending limits. Budget authority was provided by the FY2014 CR under the same authority and conditions, and to the same extent and manner, as was provided in the FY2013 Consolidated Act. In addition, under the terms of this CR, none of the funds provided were to be used to initiate or resume an activity for which budget authority was not available in FY2013. Effectively, this provision extended many of the provisions in the FY2013 Consolidated Act that stipulated or otherwise placed limits on agency authorities during FY2013. A goal of these and similar provisions in other CRs, as well as many of the other provisions discussed in the sections below, was to protect the ability for Congress to ultimately provide annual funding in the manner and for the purposes it chooses in whatever final appropriations measures are enacted. Funding in the FY2014 CR was effective as of October 1, 2013, and was to terminate on January 15, 2014. This CR also provided that budget authority for some or all projects and activities could be superseded by the enactment of the applicable regular appropriations act or another CR prior to or on January 15. For projects and activities funded in the FY2014 CR that were not subsequently funded in the applicable full-year appropriations act enacted prior to or on January 15, budget authority under the CR would immediately cease upon such enactment. The FY2014 CR provided budget authority for projects and activities that were funded in the FY2013 Consolidated Act, at the rate that they were funded therein. This rate was calculated based on the amount of funding available under the terms of the previous year's appropriations act, including any provisions reducing FY2013 budget authority that were included in those acts. More broadly, this rate was also to reflect the impact of the across-the-board rescissions in Division G of the Consolidated and Further Continuing Appropriations Act of 2013 ( P.L. 113-6 ), as well as any reduction that occurred pursuant to the March 1 presidential sequestration order. Many of the anomalies in this CR affected the funding levels that would otherwise be provided by the formula for covered activities. For example, a provision in the CR stated, Notwithstanding section 101, amounts are provided for "The Judiciary--Courts of Appeals, District Courts, and Other Judicial Services--Salaries and Expenses" at a rate of operations of $4,820,181,000: Provided, That notwithstanding section 302 of Division C, of P.L. 112-74 as continued by P.L. 113-6 , not to exceed $25,000,000 shall be available for transfer between accounts to maintain minimum operating levels. In this and other such instances, an alternative amount of annualized funding is provided for a specified project or activity, which may be higher or lower than what the CR's formula would provide. Other anomalies affected the purpose for which funds could be spent with reference to the FY2013 appropriations acts, or the duration of the authority to spend such funds. For example, the CR provides, Notwithstanding any other provision of this joint resolution, the District of Columbia may expend local funds under the heading "District of Columbia Funds" for such programs and activities under title IV of H.R. 2786 (113 th Congress), as reported by the Committee on Appropriations of the House of Representatives, at the rate set forth under "District of Columbia Funds--Summary of Expenses" as included in the Fiscal Year 2014 Budget Request Act of 2013 (D.C. Act 20-127), as modified as of the date of the enactment of this joint resolution. In effect, this provision allowed for the District of Columbia to spend local funds for an alternative set of purposes (and amounts) than what would have been provided under Section 101, as well as to spend those funds beyond the expiration date in Section 106. Provisions in the CR also extended expiring statutory authorities. For example, the CR provided, The authority provided by sections 1205 and 1206 of the National Defense Authorization Act for Fiscal Year 2012 ( P.L. 112-81 ) shall continue in effect, notwithstanding subsection (h) of section 1206, through the earlier of the date specified in section 106(3) of this joint resolution or the date of the enactment of an Act authorizing appropriations for fiscal year 2014 for military activities of the Department of Defense. Extensions of statutory authorities in the CR, unless otherwise indicated, were in effect through January 15, 2014. According to CBO, the total amount of annualized budget authority for regular appropriations subject to the BCA limits (including projects and activities funded at the rate for operations and anomalies) was $986.3 billion. When spending was included in the CBO estimate that was designated under Section 251(b) of the BBEDCA for OCO/GWOT, continuing disability reviews and redeterminations, health care fraud abuse control, or disaster relief, the total amount of annualized budget authority in the CR was $1.088 trillion. At the time it was enacted, the annualized levels of spending in the FY2014 CR would have exceeded one of the two statutory discretionary spending limits. While nondefense spending in the CR was estimated by CBO to be the equivalent of an annual level of $468.3 billion, which was about $1 billion below the existing nondefense limit, the estimate for defense spending was $518 billion, about $20 billion above the existing defense limit. The BCA limits, however, were not to be enforced until 15 calendar days after the congressional session adjourned sine die . In the interim, the Bipartisan Budget Act ( P.L. 113-67 ) amended the FY2014 limits to be $520.5 billion in defense spending, and $491.8 billion in nondefense spending (about $1.012 trillion total). Spending in the FY2014 CR was about $2.5 billion below the amended defense limit, and $23.5 billion below the amended nondefense limit. The fourth CR for FY2014 extended the expiration date of the previous CR ( P.L. 113-46 ) to January 18, 2014. No other amendments to the FY2014 CR were made by the act.

Four continuing resolutions (CRs) were enacted during the FY2014 appropriations process, to provide temporary funding until the Consolidated Appropriations Act, FY2014, was enacted on January 17, 2014 (P.L. 113-76). The first two CRs were enacted before and during the FY2014 funding gap, which commenced on October 1, 2013, and terminated on October 17, 2013. Both of these were "narrow" CRs, in that they only funded certain prior year projects and activities. The first CR, the Pay Our Military Act (H.R. 3210; P.L. 113-39), was enacted on September 30, 2013. It provided funds for certain Department of Defense (DOD) and Department of Homeland Security (DHS) activities in the absence of a general CR or annual appropriations. An additional CR was enacted during the funding gap (the Department of Defense Survivor Benefits Continuing Appropriations Resolution, 2014; H.J.Res. 91; P.L. 113-44), to provide appropriations for military death gratuities. The funding gap terminated on October 17, 2013, through the enactment of a "broad" CR that funded the previous fiscal year's projects and activities through January 15, 2014 (the Continuing Appropriations Act, 2014; H.R. 2775; P.L. 113-46). The funding rate for these projects and activities was based upon the amount available under the previous year's appropriations acts, including any reductions to those amounts through provisions in those prior year acts. It also reflected the reductions that occurred pursuant to the March 1 presidential sequestration order. When accounting for the anomalies that were included in the CR, the Congressional Budget Office (CBO) estimated that the annualized budget authority subject to the statutory spending limits was $986.3 billion. The total amount of annualized budget authority (including spending designated for overseas contingency operations/global war on terror, continuing disability reviews and redeterminations, health care fraud abuse control, and disaster relief) was $1.088 trillion. To allow additional time to conclude the annual appropriations process, funding provided by the third CR was extended to January 18, 2014, through the enactment of a fourth CR (Making further continuing appropriations for fiscal year 2014, and for other purposes; H.J.Res. 106; P.L. 113-73).

From 1988 until 2008, the State Department designated the government of North Korea, officially known as the Democratic People's Republic of Korea (DPRK), as a state sponsor of terrorism. Since the Bush Administration's October 2008 removal of the DPRK from the three state sponsors of terrorism lists (see " Listing a Country as a State Sponsor of Terrorism ," below), provocative actions by North Korea periodically have been followed by calls for the Obama Administration to redesignate Pyongyang as a terrorism sponsor. The state sponsors lists include governments that the Secretary of State determines have "repeatedly provided support for acts of international terrorism." As of January 2015, the governments of Cuba, Iran, Sudan, and Syria are on the lists. The calls to redesignate North Korea were particularly intense in 2010, following the sinking of a South Korean naval vessel, as well as in late 2014, following a cyberattack against Sony Pictures Entertainment and a threat against theater-goers to Sony's movie, The Interview. The film depicts the fictional assassination of North Korean leader, Kim Jong-un. U.S. and foreign government sources have implicated North Korea in all three incidents. Interdictions of North Korean missile and conventional arms shipments to Iran and Syria, and from Cuba--as well as reports of North Korean arms sales to and training of known terrorist actors such as Hezbollah and Hamas--also have fueled the calls to redesignate the DPRK government as a state sponsor of terrorism. Since 2008, Members of Congress have made several legislative attempts to challenge the Bush Administration's decision to remove North Korea's state sponsor of terrorism designation. In the 114 th Congress, H.R. 204 expresses the sense of Congress that the Secretary of State should redesignate North Korea as a state sponsor of terrorism. H.R. 1771 , the North Korea Sanctions Enforcement Act from the 113 th Congress, would have imposed many of the restrictions on the DPRK that would be triggered if it were redesignated as a state sponsor of terrorism. The House passed H.R. 1771 in July 2014, and many expect that a similar bill will be introduced in the 114 th Congress. The Bush Administration's removal of the DPRK from the state sponsor of terrorism lists does not appear to have provided Pyongyang with significant tangible economic benefits. Two main reasons are North Korea's widely perceived lack of appeal as a trade and investment partner and the numerous U.S. legal restrictions on doing business with and in North Korea. Commercial U.S.-DPRK trade has remained virtually at zero, as in the years before the delisting. The U.S. Department of Commerce continues to treat North Korea as a supporter of terrorism when it considers export license applications for dual-use and restricted goods and services; Commerce's Bureau of Industry and Security keeps North Korea in its most restricted trade categories. Annual foreign assistance appropriations laws continue to prohibit direct bilateral aid to North Korea; the United States withholds contributions to United Nations programs proportionate to U.N. spending in the DPRK. Although some U.S. companies, including DHL and the Associated Press, have opened offices in North Korea since 2008, the number and scope of these operations appear to be small in scale, and likely would require a special license from the Treasury Department's Office of Foreign Assets Control if the North Korean government is redesignated. Thus, redesignating the DPRK as a terrorism sponsor appears unlikely to inflict significant direct economic punishment on North Korea, particularly in the short term. However, even if redesignation directly causes only a small practical effect, North Korea-watchers who want to increase pressure on North Korea may favor such a move because the Kim regime likely would perceive it as a sign of a tougher U.S. approach. For a number of reasons, a decision to redesignate the DPRK as a state sponsor of terrorism could have a significant impact on diplomacy with North Korea. The Kim regime has been promoting a two-track policy (the so-called byungjin line) of nuclear development and economic development, with the latter goal partially dependent upon influxes of foreign investment. Some analysts of North Korea have pointed to signs that the Kim regime is pursuing economic reforms more earnestly than commonly is thought and is poised to accelerate the reforms in 2015. The DPRK could be particularly sensitive to a redesignation, which could be perceived as a threat to the potential economic gains the North Korean government expects from its byungjin policy. Therefore, those who wish to encourage North Korea's economic reforms, in the belief that they eventually would lead to changes in the government and/or the government's behavior, may oppose redesignating the DPRK. In contrast, those who wish to increase economic pressure on North Korea by undercutting the byungjin line may favor redesignating the DPRK. For more on U.S.-North Korea relations, see CRS Report R41259, North Korea: U.S. Relations, Nuclear Diplomacy, and Internal Situation , by [author name scrubbed] and [author name scrubbed]. Placing North Korea back on the lists could forestall any future diplomatic initiatives between the United States and North Korea. One of North Korea's long-standing foreign policy goals is improving relations with the United States, particularly if this can be accomplished on Pyongyang's terms and can be paired with economic benefits. Many analysts interpreted Pyongyang's decision in the fall of 2014 to release three U.S. detainees as a sign that North Korea is seeking a new diplomatic breakthrough with Washington, part of a broad outreach that also included overtures to South Korea, Japan, and Russia. Redesignation could be interpreted by North Korean leaders, as well as officials in other countries, as a sign that the Obama Administration is not interested in dialogue. Additionally, given previous patterns of North Korean behavior, it is possible that Pyongyang would respond to a redesignation by taking additional provocative actions, such as more nuclear-weapon or long-range-missile tests. North Korea has not conducted such tests since early 2013. Additionally, North Korean leaders might try to use a redesignation to convince other countries, particularly China, that the United States is to blame if tensions between Pyongyang and Washington increase. Even without encouragement from North Korea, China may be inclined to use redesignation as a pretext for opposing U.S. and South Korean efforts to increase pressure on North Korea through other means. Although the South Korean government of Park Geun-hye has maintained a relatively hard line towards North Korea, she has made improved relations with Pyongyang a signature goal for her term and has pressed North Korea to improve relations and open negotiations over various issues. Returning Pyongyang to the terrorism sponsor list could complicate these initiatives, particularly her desire to encourage multinational companies to invest in the inter-Korean Kaesong Industrial Complex, which operates in North Korea. Nonetheless, many people in South Korea--as well as in Japan--who favor adopting a tougher approach to North Korea likely would welcome the DPRK's redesignation as a terrorism sponsor. One proponent of redesignating the DPRK argues that if the U.S. government explicitly links the North Korean government to terrorism, it would give encouragement to North Korean refugees, helping them to resist intimidation. North Korean refugees have become an important source of information about and insights into North Korean politics, economics and society. Additionally, some see these defectors as a means to spread news about the outside world into North Korea, such as through operating radio stations in Seoul, some of which have received U.S. democracy assistance funds. There have been reports that North Korean agents have targeted some refugees for harassment, kidnapping, and assassination. If redesignated, North Korea might make removal from the list a precondition for cooperation in any future talks over its nuclear, missile, chemical, biological, or cyber weapons programs. Redesignation could create both an obstacle to future talks and a possible bargaining lever for the United States if negotiations restart. CRS Report R43835, State Sponsors of Acts of International Terrorism--Legislative Parameters: In Brief , by [author name scrubbed], provides more information and analysis about the state sponsors of terrorism lists. The Secretary of State can designate a government of a country as a state sponsor of acts of international terrorism pursuant to three laws: Section 6(j) of the Export Administration Act of 1979; Section 40 of the Arms Export Control Act; and Section 620A of the Foreign Assistance Act of 1961. Thus, there effectively are three state sponsors of terrorism "lists." None of the three Acts defines the overarching term "international terrorism." However, Section 140 of the Foreign Relations Authorization Act, Fiscal Years 1988 and 1989, in its requirement that the Secretary of State report annually to Congress on foreign governments supporting international terrorism, defines "terrorism" as "premeditated, politically motivated violence perpetrated against noncombatant targets by subnational groups or clandestine agents.... " Criteria considered by the Secretary of State when assessing whether a foreign government should be added to the lists include, but are not limited to: supplying a terrorist organization with planning, training, logistics, and lethal material support; providing direct or indirect financial assistance; abetting the proliferation of weapons of mass destruction; or providing other types of assistance that could provide material support for the terrorist organization's activities. Supplying weapons or weapons technology to governments designated as state sponsors of terrorism generally has not been considered justification for designating the supplier government as a state sponsor of terrorism. Laws that seek to deter weapons proliferation, however, might come into play. The enumerated criteria do not specify the type of incidents or the level or duration of terrorism related activities that might be considered by the Secretary of State when deciding whether or not the United States should designate a foreign government as a state sponsor of terrorism. Some analysts suggest that the ambiguity of the criteria may be purposeful insomuch as it would give the Secretary of State and the President a great deal of discretion when weighing competing policy and political implications associated with placing a government on the list. In North Korea's case, diplomatic and policy considerations appear to have weighed heavily in the designation of the DPRK from 2000 to 2007, as well as in the decision to remove the designation in 2008. Originally, the government of North Korea was added to the lists because it was implicated in the in-flight bombing of Korean Air flight 858 on November 29, 1987, which killed all 115 passengers and crew on board. For years before 2008 the State Department's annual reports on global terrorist activities stated that North Korea was not known to have sponsored any terrorist acts since the Korean Air attack. However, the Department's reports listed a number of other factors that merited North Korea's continuation on the state sponsors lists, including: the abductions of Japanese citizens in the 1970s and 1980s; the harboring of several Japanese Red Army terrorists who participated in a jet hijacking in 1970; the failure to take "substantial steps" to cooperate in efforts to combat international terrorism; the maintenance of ties to terrorist groups; and developing a capability to manufacture weapons of mass destruction that could be acquired by other terrorist states or non-state entities. In 2008, the Secretary of State removed North Korea from the lists despite little change in most of the above conditions. Instead, the decision appears to have been made primarily for diplomatic reasons: removing the government of North Korea from the terrorism lists was part of the 2007 deal that the Bush Administration made with Pyongyang as part of the Six-Party Talks seeking to disable North Korea's nuclear program. Under the 2007 deal, North Korea agreed to disable its nuclear installations at the Yongbyon site and provide the other five countries with a "complete and correct" declaration of its nuclear programs. Some analysts have argued that the subsequent collapse of the Six-Party process, along with North Korea's advances in its nuclear programs, have erased the original diplomatic justification for removing North Korea from the state sponsor of terrorism lists. During a January 13, 2015, House Foreign Affairs Committee hearing on North Korea, the State Department's Special Representative for North Korea Policy, Sung Kim, said that the Department has an "ongoing process" to assess whether North Korea meets the criteria for being designated as a state sponsor of terrorism. A foreign government on the state sponsors of terrorism lists is subject to restrictions on trade, investment, and assistance. (See Table 1 .) A listed country is subject to U.S. export controls--particularly of dual-use technology--and trade in defense goods and services is prohibited. Placement on the list also may trigger denial of beneficial trade designation (such as normal trade relations (NTR) or inclusion in the Generalized System of Preferences (GSP) program), unfavorable tax status for investors, and stricter licensing requirements for financing trade with the United States in agriculture, medicine, and medical supplies. Providing most foreign aid under the Foreign Assistance Act of 1961 and the Millennium Challenge Act is also prohibited. There are exceptions to address unanticipated humanitarian disasters; the United States provided hundreds of millions of dollars in food, energy, and medical assistance to North Korea while Pyongyang was on the terrorism lists. By law, the United States must oppose membership in and financial assistance from international financial institutions--such as the World Bank, Asian Development Bank, and the International Monetary Fund--for any foreign government on the U.S. terrorism lists. Additionally, U.S. citizens are prohibited from conducting transactions with designated governments without a license from the Office of Foreign Assets Control. There are two possible paths for removing a foreign government from designation as a state sponsor of terrorism. The first procedure requires the President to provide a written certification to Congress stating that there has been a fundamental change in the leadership and policies of the designated government, that it is not supporting acts of international terrorism, and that the current government leaders have given assurances to the United States that the country will not support terrorism in the future. The second procedure, which the Bush Administration used in North Korea's case, requires the President to submit, 45 days prior to removing the designated foreign government from the list, a written report to Congress certifying that it has not provided support to terrorism-related activities during the preceding six months and that current government leaders have provided assurances that it will not support terrorism-related activities in the future. Congress may pass a joint resolution blocking a government's removal from the list, though such legislation would require the President's signature to become law. In the 110 th Congress (2007-2008), Members introduced at least three measures objecting to the Bush Administration's delisting of the DPRK. None was enacted. The issue of removing North Korea from the U.S. lists of state sponsors of terrorism appears to have first become a significant issue in U.S.-North Korean diplomacy in 2000. In U.S.-DPRK negotiations that year over North Korea's long-range missile program, Pyongyang demanded that it be removed from the list of terrorism-sponsoring governments as well as from the restrictions required under the Trading with the Enemy Act (TWEA). The Clinton Administration reportedly presented to North Korea in February 2000 four steps that North Korea would have to take to be removed from the terrorism lists: (1) issue a written guarantee that it no longer is engaged in terrorism; (2) provide evidence that it has not engaged in any terrorist act in the past six months; (3) join international anti-terrorism agreements; and (4) address issues of past support of terrorism. Although the two countries issued a joint statement on September 27, 2000, in which North Korea restated its opposition to terrorism, the issue largely lapsed in this phase of U.S.-North Korean diplomacy, as the Clinton Administration rejected North Korean demands that it be delisted. The discussions were revisited in 2003-2004, during the first stages of the Six-Party Talks over the North Korean nuclear issue. Removal from the terrorism support list was near the top of North Korean demands for concessions that the United States provide in return for North Korean concessions, such as a "freeze" of its plutonium nuclear programs. The Bush Administration resisted these demands, giving significant emphasis to the Japanese abduction issue. The final phase of negotiations over North Korea's inclusion on the terrorism lists occurred in the 2006-2008 period, following North Korea's first nuclear test in October 2006. In February 2007, the six parties reached an agreement under which North Korea agreed to freeze and then disable its nuclear programs, and the United States agreed to take steps that included removing North Korea from the terrorism sponsor list. On January 22, 2008, Dell Dailey, the State Department's coordinator for counterterrorism, reportedly stated that it appeared that North Korea had complied with the criteria for removal from the terrorism support lists because North Korea had not committed an act of terrorism for the past six months. He added that despite the unresolved Japanese kidnapping issue, "we think that even with that on the table that they still comply with the ... delisting criteria." Later that year, after considerable back-and-forth in the nuclear negotiations, the Bush Administration removed North Korea from the terrorism sponsorship lists, as well as from the TWEA strictures. Since the United States removed North Korea from the terrorist list, Pyongyang has taken or been linked to a number of actions that have led to calls to place the North Korean government back on the list of state sponsors of terrorism. These actions have included multiple nuclear and missile tests, in violation of United Nations Security Council resolutions, and the 2010 attacks against a South Korean naval vessel, the Cheonan , and Yeonpyeong Island. Since 2008, the State Department has responded to questions about whether to re-list North Korea by answering that although North Korea's actions are being continually reviewed, they do not fit the criteria for inclusion on the list. For instance, in response to North Korea's April 2009 long-range missile test and May 2009 nuclear weapon test, Assistant Secretary of State for Public Affairs Philip Crowley said that North Korea's tests of a nuclear weapon and long-range missile (in April 2009) did not meet the legal definition of terrorism." In June 2010, following the determination that a North Korean submarine had sunk the Cheonan , the State Department issued a press release indicating that North Korea had not been placed back on the terrorism lists because it had not "repeated[ly] provide[d] support for acts of international terrorism," as required by statute. Furthermore, Crowley said that the Department had determined that while the Cheonan 's sinking was a violation of the 1953 armistice agreement that brought an end to the major fighting of the Korean War, it was not an act of international terrorism because it was "taken by the military or the state against the military of another state." Therefore, Crowley said, the sinking "by itself would not trigger placing North Korea on the state sponsor of terrorism list." Events in late 2014 again led to calls to redesignate the government of North Korea as a state sponsor of terrorism. In June 2014 North Korean officials reacted to Sony Pictures Entertainment's forthcoming film, The Interview , about the fictional assassination of North Korean leader Kim Jong-un. North Korea's Foreign Ministry said that "a movie of a plot to hurt our top-level leadership is the most blatant act of terrorism and war" and threatened a "merciless countermeasure" if The Interview was released. On November 24, Sony Pictures Entertainment experienced a cyberattack that disabled its IT systems, destroyed data, and released to the public internal emails. North Korea denied involvement in the attack, but praised the hackers, who called themselves the "Guardians of Peace," as having done a "righteous deed." Weeks later, anonymous emails threatened "9/11-style" terrorist attacks on theaters showing the film, leading some theaters to cancel screenings and subsequently to Sony's cancelling the film's scheduled widespread Christmas Day release. In responding to the possibility of such attacks, Department of Homeland Security Secretary Jeh Johnson noted that the United States has "no specific, credible intelligence of a plot to launch attacks on movie theaters." Sony later announced the film would be shown in a small number of theaters and available on some online streaming services. As concerns about the violent threats and challenge to freedom of expression grew in U.S. media, the U.S. government more publicly weighed in on the incident. The Federal Bureau of Investigation (FBI), which had been investigating the cyberattacks, and the Director of National Intelligence (DNI) declared that North Korean government was responsible for the intrusions into Sony's systems. During a December 19, 2014, press conference, President Obama pledged to "respond proportionally" against North Korea. In an interview with CNN, Obama called the incident "cyber-vandalism," implying that it was not an act of war. On December 20, cyber analysts and news media reported that the North Korean network providing access to the Internet faltered and then eventually went offline for approximately 10 hours. Many cyber analysts said the disruption pointed to an attack on North Korea's network, although they could not rule out either an overload or a preventive shutdown by North Korea. Two groups linked to the hacker collective Anonymous claimed responsibility for shutting down North Korea's Internet connection using denial-of-service attacks. U.S. officials would not comment on whether this constituted the "proportional response" promised by Obama. On January 2, 2015, the White House issued an Executive Order authorizing additional sanctions on North Korean individuals and entities, calling it a "first aspect" of its proportional response. Pyongyang denied any responsibility for the cyberattack on Sony, and some cybersecurity experts expressed skepticism that the North Korean government executed the attack, while others point to evidence of growing North Korean capabilities in cyber warfare. The FBI claimed that the Sony attack used the same malware as previous attacks attributed to North Koreans, but some cyber experts say that evidence is circumstantial and speculative. Administration officials have claimed that other intelligence used to make the determination is classified and unavailable for public consumption. On January 7, 2015, at a cybersecurity conference in New York City, FBI Director James Comey, in discussing whether North Korea was behind the cyberattack, stated "There is not much in this life that I have high confidence about--I have very high confidence about this attribution, as does the entire intelligence community." At this same event DNI James Clapper noted that this cyberattack was "the most serious ever against U.S. interests." As of January 2015, a cyber-related incident directed at the United States has never been used as justification for inclusion on the state sponsors of terrorism lists. It could be argued that current laws relating to the state sponsor of terrorism lists may be viewed as sufficiently broad and ambiguous to allow for the inclusion of cyber-based incidents as a designation criterion. Conversely, it might be argued that the laws supporting the state sponsor of terrorism designation were focused on physical acts of politically motivated violence and amendments to existing legislation would be required to include unauthorized cyber-based intrusions of networks owned by U.S. entities as a viable criterion. However, changing current legislation to include cyber-related incidents as acts of terrorism could lead to calls for designating other governments as state sponsors of terrorism. For instance, on May 19, 2014, the U.S. Department of Justice indicted five Chinese military hackers for computer hacking and economic espionage directed at six American victims in the U.S. nuclear power, metals, and solar products industries. In discussing the details related to this indictment, U.S. Department of Justice Attorney General Eric Holder stated "this is a case alleging economic espionage by members of the Chinese military and represents the first ever charges against a state actor for this type of hacking." A suggestion to add the government of China to the state sponsors of terrorism lists does not appear to have been voiced after this incident. Since 2003, the State Department's annual report on global terrorist activities has stated that North Korea has not been conclusively linked to any terrorist acts since the 1987 KAL bombing. Some observers have questioned the basis for the State Department's claims. They point to several pieces of evidence and reports, which generally fall in five categories. For more on North Korea's relationship with the Iranian, Syrian, and Libyan ballistic missile and nuclear programs, see CRS Report R43480, Iran-North Korea-Syria Ballistic Missile and Nuclear Cooperation , coordinated by [author name scrubbed]. P roliferation of weapons of mass destruction , including: U.S. government statements that North Korea helped Syria build the Al Kibar nuclear reactor, which Israel destroyed in 2007, and could have been used to produce plutonium for nuclear weapons. Three seizures--in October 2009, November 2009, and April 2013--of shipments of North Korean chemical protective suits, gas indicator ampoules, and gas masks to Syria, which had an active chemical weapons program. Press reports that North Korea and Iran are cooperating in developing nuclear capabilities or nuclear weapons. U.S. officials have stated publicly that there is no nuclear cooperation between Iran and North Korea. U.S. government statements that North Korea provided nuclear materials to Libya in the early 2000s. Missile sales to and co-development with other countries , including: Long-standing statements by various U.S. government officials that North Korea and Iran maintain a close working relationship on various missile programs, including ballistic missile systems; U.S. government accounts of North Korea missile sales and transfers to Syria, buttressed by the seizure by Japanese, South Korean, Thai and other government authorities of North Korean missile parts heading to Syria and Burma (Myanmar); Conventional a rms s ales and t ransfers , including: The July 2013 interdiction in Panama of the Chong Chon Gang , a North Korean cargo ship carrying fighter aircraft parts and engines, surface-to-air missile parts, ammunition, and other military equipment from Cuba. The Cuban government claimed the materials were to be "repaired" in North Korea before being returned to Cuba, though some analysts have expressed skepticism that some of the weapons systems were meant to be returned; and Reports of North Korean arms shipments to Iran, as well as to Syria via Iran and via Turkey. Ties to Hezbollah and Hamas , both of which the State Department has designated as foreign terrorist organizations. See the text box below for more information. Kidnapping, a ssassination, and other d irect a ctivities against c ivilians , including: Accounts of attempted and successful assassinations and kidnappings of North Korean refugees, critics of the DPRK, and foreigners attempting to help North Koreans defect. Notable accounts include December 2014 news reports of North Korean agents attempting to murder a North Korean refugee in Denmark, 2013 news reports of an attempt to kidnap a North Korean student in Paris, and accounts of the abduction and murder of the Reverend Kim Dong-shik, a Korean-American, in 2000. Since the DPRK was removed from the state sponsors of terrorism lists in 2008, actions that North Korea has taken and been accused of taking have fueled an ongoing discussion about whether it should be re-listed. To date, cyber-related incidents such as the late 2014 attack on Sony have not been used as justification for inclusion on the state sponsors of terrorism lists. The 2009 and 2013 seizures of chemical protection equipment bound for Syria appear to be the only DPRK actions since 2008 that both (1) were recognized by official U.S. or U.N. bodies, and (2) conceivably could have met the statutory criteria for relisting. Official U.S. government and United Nations sources have concluded that the DPRK sold missile parts and conventional weapons to a variety of countries, including a number of state sponsors of terrorism. North Korea also has launched a conventional military attack against a South Korean island that killed civilians, and has been implicated in a torpedo attack against a South Korean naval vessel. However, none of these activities are included in the statutory criteria for adding a government to the state sponsors of terrorism lists. The same is true of cyberattacks, such as the 2014 attack on Sony that rekindled the debate over whether to re-list the DPRK. The North Korean government has been linked to a number of other actions--such as helping designated terrorist organizations as well as conducting kidnappings and assassinations in foreign countries--that some have argued should be grounds for returning the DPRK to the state sponsors of terrorism lists. As of early 2015, the information to support these claims has not been presented by the U.S. government. Of these alleged activities, perhaps the most significant are North Korea's reported weapons sales to and training of Hezbollah and Hamas. As discussed earlier, historically, diplomatic and policy considerations appear to have played a prominent role in the State Department's decisions about the DPRK's place on the state sponsors of terrorism lists. Thus, even if the North Korean government's actions are deemed to meet the re-listing criteria, the State Department is likely to weigh the prospective positive and negative consequences that re-listing would have on international diplomacy with North Korea.

From 1988 until 2008, the United States designated the government of North Korea, officially known as the Democratic People's Republic of Korea (DPRK), as a state sponsor of terrorism. The Reagan Administration designated the DPRK after it was implicated in the 1987 bombing of a South Korean airliner, in which more than 100 people died. The George W. Bush Administration removed the designation from the DPRK in 2008, one of the measures the United States took in exchange for North Korea's agreement to take steps to disable its nuclear program. As of early 2015, only the governments of Cuba, Iran, Sudan, and Syria remain on the lists. The State Department can designate a government as a state sponsor of acts of international terrorism pursuant to three laws: the Export Administration Act of 1979; the Arms Export Control Act; and the Foreign Assistance Act of 1961. Thus, there effectively are three state sponsors of terrorism "lists." The State Department can use a variety of criteria when assessing whether a government should be added to and removed from the lists. In North Korea's case, policy considerations appear to have weighed heavily in the designation of the DPRK from 1988-2007, as well as in the decision to remove the designation in 2008. In the 114th Congress, H.R. 204 expresses the sense of Congress that the State Department should redesignate the DPRK as a state sponsor of terrorism. According to the State Department, North Korea has not been conclusively linked to any terrorist acts since 1987. Some observers have questioned the Department's claim. These observers support their contention by citing seizures of cargo ships carrying North Korean missile parts and conventional weapons, apparently to Syria and Burma (Myanmar). U.S. government agencies have stated that North Korea helped Syria build a nuclear reactor, and that North Korea and Iran cooperate closely in missile development. According to press reports, North Korea has provided support to Hamas and Hezbollah, and has targeted North Korean refugees living overseas for kidnapping and assassination. The 2010 sinking of a South Korean naval vessel also triggered calls to redesignate the DPRK. To date, cyber-related incidents such as the late 2014 attack on Sony have not been used as justification for designation as a state sponsor of terrorism. The 2009 and 2013 seizures of chemical protection equipment bound for Syria appear to be the only DPRK actions since 2008 that both (1) were recognized by official U.S. or U.N. bodies, and (2) conceivably could have met the statutory criteria for designation. Redesignating the DPRK as a terrorism sponsor appears unlikely to inflict significant direct economic punishment on North Korea, particularly in the short term. However, a decision to redesignate North Korea as a state sponsor of terrorism could have a significant impact on international diplomacy with North Korea. The Kim regime could perceive redesignation as a threat to its two-track policy of nuclear development and economic development, with the latter goal partially dependent upon influxes of foreign investment. Placing North Korea back on the lists could forestall future diplomatic initiatives between Washington and Pyongyang, particularly if North Korean leaders--as well as Chinese leaders--interpret it as a sign that the United States is not interested in dialogue. Given previous patterns of North Korean behavior, it is possible that Pyongyang would respond to a redesignation by taking additional provocative actions, such as more nuclear-weapon or long-range-missile tests. North Korea has not conducted such tests since early 2013. Returning Pyongyang to the terrorism sponsor lists also could complicate the South Korean government's initiatives to improve relations with North Korea. Assessing the merits of these implications depends heavily on whether or not one believes the United States should adopt a harsher stance toward Pyongyang.

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

The connection between farm labor and immigration policies is a longstanding one, particularly with regard to U.S. employers' use of workers from Mexico. The Congress periodically has revisited the issue during debates on guest worker programs, increased border enforcement, and employer sanctions to curb the flow of unauthorized workers. Two decades ago, the Congress passed the Immigration Reform and Control Act (IRCA, P.L. 99-603) to reduce illegal entry into the United States by imposing sanctions on employers who knowingly hire persons who lack permission to work in the country. In addition to a general legalization program, IRCA included legalization programs specific to the agricultural industry that were intended to compensate for the act's expected impact on the farm labor supply and encourage development of a legal crop workforce. These provisions of the act have not operated in the offsetting manner that was intended: substantial numbers of unauthorized aliens have continued to join legal farm workers in performing seasonal agricultural services (SAS). A little more than one-half of the SAS workforce is not authorized to hold U.S. jobs. Crop growers contend that their sizable presence implies a shortage of native-born farm workers. Grower advocates argue that farmers would rather not employ unauthorized workers because doing so puts them at risk of incurring penalties. Farm worker advocates counter that crop growers prefer unauthorized workers because they are in a weak bargaining position. If the supply of unauthorized workers were curtailed, it is claimed, farmers could adjust to a smaller workforce by introducing labor-efficient technologies and management practices, and by raising wages, which, in turn, would entice more U.S. workers to accept farm jobs. Growers respond that further mechanization would be difficult for some crops, and that much higher wages would make the U.S. industry uncompetitive in world markets without expanding the legal farm workforce. These remain untested arguments because perishable crop growers have rarely, if ever, operated without unauthorized foreign-born workers. Trends in the agricultural labor market generally do not suggest the existence of a nationwide shortage of domestically available farm workers, in part because the government's databases cover authorized and unauthorized workers. While total nonfarm wage and salary employment generally increased between the two recessions of the current decade, for example, the number of farm jobs fluctuated erratically and ended down for the period. The length of time hired farm workers are employed has changed little or fallen over the years as well. Their unemployment rate has varied slightly and remains well above the U.S. average. Underemployment among farm workers also remains substantial. In addition, the earnings of farm workers has changed little over time relative to other nonmanagement employees in the private sector. This assessment does not preclude the possibility of labor shortages in particular geographic areas at particular times of the year. Some statistical evidence suggests that California growers experienced a tighter labor market in July 2007 compared to peak harvest season a year earlier, for example.

Combining elements of mathematics, computer science, engineering, and physical sciences, quantum information science (QIS) has the potential to provide capabilities far beyond what is possible with the most advanced technologies available today. Quantum science, generally, is the study of the smallest particles of matter and energy; QIS builds on quantum science principles to obtain and process information in ways that cannot be achieved based on classical physics principles. QIS is based on the premise that information science depends on quantum effects in physics. The advantages to using QIS in certain circumstances can be illustrated by the example of quantum computing. Quantum computing is not just "faster" than classical computing. It is not useful for many types of problems where a classical supercomputer would excel. However, there are certain tasks for which the power of quantum computing is unmatched, such as code breaking. This power is derived from quantum computing's use of "qubits" or "quantum bits." Whereas classical computing uses "bits" for data processing, quantum computing uses qubits. The practical difference between a bit and a qubit is that a bit can only exist in one of two states at a time, usually represented by a 1 and a 0, whereas a qubit can exist in both states at one time. This is a phenomenon called "superposition" and it is what allows the power of a quantum computer to grow exponentially with the addition of each bit. Two bits in a classical computer provides four possible combinations--00, 01, 11, and 10, but only one combination at a time. Two bits in a quantum computer provides for the same four possibilities, but, because of superposition, the qubits can represent all four states at the same time, making the quantum computer four times as powerful as the classical computer. So, adding a bit to a classical computer increases its power linearly, but adding a qubit to a quantum computer increases its power exponentially--doubling power with the addition of each qubit. Quantum computing, for all its promise, is still a developing technology (along with other quantum applications). Assembling a working quantum computer is much more difficult than assembling a classical computer. The difficulty is caused by the narrow set of conditions that must exist for a quantum computer to work. For example, the temperature must be exactly 1/100 th of a degree above absolute zero. Also, the slightest vibration can cause a qubit to lose its superposition. Until systems can be developed to maintain the ideal conditions to maintain a qubit, many quantum systems will remain theoretical in nature. Although much of the press coverage of QIS has been devoted to quantum computing, there is more to QIS. Many experts divide QIS technologies into three application areas: Sensing and metrology, Communications, and Computing and simulation. Quantum sensing and metrology include navigation, atomic clocks, gravimeters and gravitational gradiometers, inertial motion units, atomic magnetometers, electron microscopes, technologies to locate subterranean mineral deposits, and quantum-assisted nuclear spin imaging devices. They currently have the largest range of existing and potential commercial products. There are also several products in this category that have been manufactured for decades, making it the most established category. In its report Assessment of the Future Economic Impact of Quantum Information Science , analysts at the Institute for Defense Analysis (IDA) determined that new technologies in quantum metrology and sensing offer improved accuracy compared to products based on classical physics or existing quantum technologies. New QIS technologies are being used for position, navigation, and timing; medical imaging; and research. Some experts believe that the potential markets for these technologies are small because in some cases, traditional technologies remain more attractive due to the higher costs and technical complexity of QIS alternatives. However, others have stated that they believe continued investment and effective coordination between the research community and industry could bring a broad range of QIS-enhanced sensors to the U.S. marketplace by 2021. Quantum key distribution (QKD) is a method of securing communications that uses quantum physics, rather than mathematical algorithms, to safeguard data sent over unprotected networks. However, signals traveling over fiber-optic cable weaken at about 60 miles and must be retransmitted. Quantum repeaters can extend the distance the signal can be sent, but they significantly increase the complexity of the process. The communications are not only secure, but any eavesdropping attempt will destroy the communication, revealing the eavesdropping attempt. The Chinese government has been spending heavily on QKD, but many analysts in North America and Europe do not believe that the benefits over existing nonquantum technologies outweigh the costs associated with QKD, making commercial demand difficult to ascertain. Quantum computing provides an exponentially larger scale than classical computing, which provides advantages for certain applications. Quantum simulation refers to the use of quantum hardware to determine the properties of a quantum system, for example, determining the properties of materials such as high-temperature superconductors, and modeling nuclear and particle physics. However, the current capabilities of quantum computers limit the size of the problems that they can be used to solve. While significant research has been conducted to date by government laboratories, university departments, and large technology companies, as well as small start-ups, it is unlikely that any commercial quantum computing will be widely available before 2025. The government's interest in QIS dates back at least to the mid-1990s, when the National Institute of Standards and Technology (NIST) and the Department of Defense (DOD) held their first workshops on the topic. QIS is first mentioned in the FY2008 budget of what is now the Networking and Information Technology Research and Development Program and has been a component of the program since then. In September 2018, the Department of Energy (DOE) announced that it had committed $218 million to 85 research projects lasting from two to five years. Also in September 2018, the National Science Foundation (NSF) announced that it had awarded $31 million in grants to 33 projects. Eight projects receiving a total of $6 million are engineering projects aimed at creating working quantum information systems (applied research). The remaining $25 million will be distributed to 25 basic research projects. Government QIS basic research is also conducted by NIST, the DOD services, and the Office of the Secretary of Defense. Additionally, the Defense Advanced Research Projects Agency and the Intelligence Advanced Research Projects Activity have funded a series of targeted programs. QIS is a component of the National Strategic Computing Initiative (Presidential Executive Order 13702), which was established in 2015. The White House has issued two reports on QIS strategy, the first under President Obama and the second under President Trump. In July 2016, the National Science and Technology Council (NSTC), under the purview of the White House Office of Science and Technology Policy (OSTP), issued Advancing Quantum Information Science: National Challenges and Opportunities . This report provided a brief description of the QIS disciplines, summarized developments and potential impacts in various fields of technology and areas of basic research, identified impediments to progress and potential approaches to addressing them, surveyed federal investments, and discussed the federal path forward in the context of international and private-sector activity. The report outlined three principles to guide U.S. government QIS R&D: Maintain stable and sustained core programs that can be enhanced as new opportunities appear and restructured as impediments evolve. Sustained core programs will allow established researchers to continue their work, give students confidence that QIS is a field with a future, and provide a solid base for translating laboratory demonstrations into marketable technology. Invest strategically in targeted, time-limited programs to achieve concrete, measureable objectives. Targeted, time-limited programs are an effective mechanism for achieving well-defined technical advances and allow quick adaptation to a changing technological landscape. Closely monitor the field to evaluate the outcome of federal QIS investments and quickly adapt programs to take advantage of technical breakthroughs as they are made. Continued monitoring is required to ensure that the federal strategy for QIS investment remains effective into the future and to avoid technological surprise. The report concluded by stating that QIS should be considered a priority for federal coordination and investment, with particular attention paid to identifying and implementing methods to address impediments to progress and maintaining a commitment to keep the United States at the leading edge of QIS developments. In September 2018, the NSTC issued The National Strategic Overview for Quantum Information Science . The policy opportunities identified in this strategic overview are summarized in Table 1 . According to the report, "following these recommendations, along with detailed planning and coordination made possible by the SCQIS as well as engagement with stakeholders, is crucial for the United States' future success." On November 19, 2018, the Department of Commerce (DOC) Bureau of Industry and Security (BIS or "bureau") released an Advance Notice of Proposed Rulemaking (ANPRM), "Review of Controls for Certain Emerging Technologies." The bureau controls the export of dual-use and other military items through export regulations. This ANPRM seeks public comment on criteria to identify emerging technologies that may be essential to U.S. national security, for example, because they-- have potential as conventional weapons or weapons of mass destruction; could provide new methods for intelligence collection; could be used as the basis for new terrorist applications; or could provide the United States with a qualitative military or intelligence advantage. These criteria may be included in possible future export control regulations. The list of categories includes, among many others, a wide range of QIS applications: positioning, navigation, timing, computing, sensing, and encryption. Comments on the ANPRM are due on December 19, 2018. QIS R&D is being pursued at major research centers worldwide, with China and the European Union (EU) having the largest foreign QIS programs. The UK and Canada have also made high-profile investments in QIS R&D, while Australia and the Netherlands have made smaller investments. Even without explicit QIS initiatives, many other countries, including Russia, Germany, and Austria, are making strides in QIS R&D. A report by the Institute for Defense Analysis, Assessment of the Future Economic Impact of Quantum Information Science, and witness testimony at congressional hearings have provided information on these initiatives. China designated QIS research as one of four "megaprojects" in its 15-year science and technology development plan for 2006-2020. Additionally, it designated quantum communications and computing as one of six major goals for this period. China's annual funding for QIS R&D is estimated at $244 million. In 2017, the country began construction of a national QIS science center. China also actively seeks out QIS experts. Since 2008, China has provided incentives to attract Chinese QIS experts and entrepreneurs, currently living and working overseas, back to China. Between 2016 and 2018, China was the first to achieve three significant QIS milestones: the launch of the world's first quantum satellite, Micius, in August 2016; the launch of a long-distance quantum communication landline, between Beijing and Shanghai, in September 2017; and the first long-distance quantum videoconference, between the Chinese Academy of Sciences in Beijing and the Austrian Academy of Sciences in Vienna, in January 2018. First outlined in the EU's 2016 Quantum Manifesto and updated in The Quantum Technologies Roadmap in August 2018, the EU's Quantum Technologies Flagship program is a $1.1 billion, 10-year initiative to commercialize the EU's investment in basic QIS R&D. The goals of the initiative are to foster a competitive European quantum industry to position Europe as a leader in the future global industrial landscape; expand European scientific leadership and excellence in quantum research; make Europe an attractive region for innovative businesses and investment in quantum technologies; and benefit from advances in quantum technologies to provide better solutions to grand challenges in such fields as energy, health, security, and the environment. In 2013, the UK established a five-year, $440 million National Quantum Technologies Program to translate QIS R&D into commercial technologies. In September 2018, the UK announced that it would invest more than $105 million in four UK-based quantum technology development centers over the next five years. Likely research areas may include internet security, vehicle driving assistance systems, life-saving equipment for search-and-rescue missions, and helping firefighters. Canada's QIS program began in 1999 with private investments that established the Perimeter Institute and University of Waterloo as leaders in QIS R&D. Canada's 2018 budget provided $11.5 million (USD) over three years to the Institute of Quantum Computing at the University of Waterloo. Three QIS-focused bills have been introduced in the 115 th Congress. Additionally, the House has held three QIS hearings. The Senate has introduced two bills and the House has introduced one bill related to QIS. The National Quantum Initiative Act ( S. 3143 , H.R. 6227 ) was introduced in the Senate on June 26, 2018, by Senator John Thune and in the House on June 27, 2018, by Representative Lamar Smith. These bills would establish a federal program to accelerate U.S. QIS R&D. Specifically, the bills would establish a National Quantum Coordination Office within OSTP to-- oversee interagency coordination, provide strategic planning support, serve as a central point of contact for stakeholders, conduct outreach, and promote commercialization of federal research by the private sector. The bills are intended to-- support basic QIS research and standards development at NIST, support DOE basic research and establish DOE national research centers, and support National Science Foundation basic research and academic multidisciplinary quantum research and education centers; encourage U.S. technology companies to contribute their knowledge and resources to a national effort; and address fundamental research gaps, assist in creating a stronger workforce pipeline, and allow the United States to take the lead in developing quantum standards and measures for global use. H.R. 6227 was reported by the House Committee on Science, Space, and Technology and passed in the House on September 13, 2018 ( H.Rept. 115-950 ) ; it was received by the Senate and referred to the Committee on Commerce, Science, and Transportation on September 17, 2018. S. 3143 was approved and ordered to be reported with an amendment in the nature of a substitute by the Senate Committee on Commerce, Science, and Transportation on August 1, 2018 (see S.Rept. 115-389 , November 27, 2018); it was placed on the Senate Legislative Calendar under General Orders on November 27, 2018. The Quantum Computing Research Act ( S. 2998 ) was introduced by Senator Kamala Harris on June 5, 2018. The bill would require the Secretary of Defense to establish the Defense Quant um Information Consortium. The c onsortium w ould include -- one component composed of members selected by the Chief of Naval Research from among institutions of higher learning and industry partners located in the eastern half of the United States which are recognized for achievement in quantum information science; and one component composed of members selected by the Director of the Army Research Laboratory from among institutions of higher learning and industry partners located in the western half of the United States which are recognized for achievement in quantum information science. The bill would also establish a board composed of-- the Chief of Naval Research and a designee of the Chief; the Director of the Army Research Laboratory and a designee of the Director; the Assistant Director of Quantum Information Science at the Office of Science and Technology Policy; and members of the National Quantum Initiative (NQI). The board would be responsible for-- awarding grants to consortium members; assisting with ongoing research being conducted by consortium members relating to quantum information sciences; and facilitating partnerships between consortium members. The Department of Energy Quantum Information Science Research Act ( S. 3673 ) was introduced by Senator Lisa Murkowski on November 28, 2018. The bill would require the Secretary of Energy to conduct basic quantum information science research, including-- formulating goals for quantum information science research to be supported by the Department of Energy; leveraging the collective body of knowledge from existing quantum information science research; providing research experiences and training for additional undergraduate and graduate students in quantum information science; coordinating research efforts funded through existing programs across the Department; and coordinating with other federal agencies, research communities, and potential users of information produced under this section. Three House committees have held hearings on different aspects of QIS. On October 24, 2017, the House Committee on Science, Space, and Technology Subcommittee on Research and Technology and Subcommittee on Energy held a joint hearing on "American Leadership in Quantum Technology." Issues discussed included-- a comparison of U.S. and international QIS R&D and how to effectively train a QIS-knowledgeable workforce. On January 9, 2018, the House Armed Services Committee Subcommittee on Emerging Threats and Capabilities held a hearing on "China's Pursuit of Emerging and Exponential Technologies." Issues discussed included-- China's investment in leading-edge technologies, including QIS, and concerns that China may be closing the gap with the United States in advanced technology R&D. On May 18, 2018, the House Committee on Energy and Commerce Subcommittee on Digital Commerce and Consumer Protection held a hearing on quantum computing as part of its "Disrupter Series." Issues discussed included -- an overview of the uses of quantum computers, the advantages of quantum computers over conventional computers, potential dangers from quantum technologies, barriers to the development of a commercially available quantum computer in the United States, and where the United States stands in relation to other nations in developing a commercially available quantum computer. In its July 2016 report, the NSTC stated that creating a cohesive and effective U.S. QIS R&D policy would require a collaborative effort among government, academia, and the private sector. The report cited five key areas that need to be addressed in crafting an effective policy: institutional boundaries; education and workforce training; technology and knowledge transfer; materials and fabrication; and the level and stability of funding. These topics were reiterated in the DOE report Quantum Sensors at the Intersections of Fundamental Science, Quantum Information Science, and Computing (2016), and during congressional hearings. QIS research is often conducted within institutional boundaries with little coordination. For example, federal departments, and even agencies and offices within a department, have sponsored R&D at a number of universities in different disciplines to address unique federal mission requirements. As a result, coordination and collaboration among these university researchers is difficult. The creation of cross-cutting teams with diverse expertise is seen by many as vital to success. Many observers and researchers contend that partnerships that encourage such collaboration will lead to greater progress than working alone. Scientists and industry representatives contend that current academic education and workforce training programs are insufficient for continued progress in QIS R&D, which requires a diverse, cross-cutting range of skills and expertise that varies from one application to another. For example, while a deep knowledge of quantum mechanics, taught in physics departments, is required for QIS basic research and applications development, disciplines taught in other departments--such as computer science, applied mathematics, electrical engineering, and systems engineering--are needed as well. Multidisciplinary QIS centers at universities and federal labs (e.g., DOE, NIST) are seen as one possible solution to this problem. Some of the potentially serious impediments to creating successful commercial QIS products include issues related to the complicated nature of licensing of intellectual property from universities and obtaining patents, lack of a strong venture capital environment, and difficulty connecting qualified recent graduates and experienced scientists with companies. Industry and government representatives have noted that some federal programs exist to address these issues, but that challenges remain. Advancement of QIS applications depends heavily on the generation of novel quantum materials and on improving the tools needed to fabricate them and package hardware that may currently fill a room into usable forms. These challenges are not yet fully understood, but scientists generally agree that advancement in QIS R&D depends upon solving them. Like other R&D programs, QIS is affected by fluctuations in federal funding. Some assert that such fluctuations have slowed QIS progress, as well as the development of a fully qualified workforce. Some of the funding instability has been attributed to insufficient coordination among federal agencies, which has led to uncertainty in university research programs. This uncertainty may have contributed to promising researchers seeking opportunities outside the United States or being actively recruited by foreign governments or companies.

Quantum information science (QIS) combines elements of mathematics, computer science, engineering, and physical sciences, and has the potential to provide capabilities far beyond what is possible with the most advanced technologies available today. Although much of the press coverage of QIS has been devoted to quantum computing, there is more to QIS. Many experts divide QIS technologies into three application areas: Sensing and metrology, Communications, and Computing and simulation. The government's interest in QIS dates back at least to the mid-1990s, when the National Institute of Standards and Technology and the Department of Defense (DOD) held their first workshops on the topic. QIS is first mentioned in the FY2008 budget of what is now the Networking and Information Technology Research and Development Program and has been a component of the program since then. Today, QIS is a component of the National Strategic Computing Initiative (Presidential Executive Order 13702), which was established in 2015. Most recently, in September 2018, the National Science and Technology Council issued the National Strategic Overview for Quantum Information Science. The policy opportunities identified in this strategic overview include-- choosing a science-first approach to QIS, creating a "quantum-smart" workforce, deepening engagement with the quantum industry, providing critical infrastructure, maintaining national security and economic growth, and advancing international cooperation. The United States is not alone in increasing investment in QIS R&D. This research is also being pursued at major research centers worldwide, with China and the European Union having the largest foreign QIS programs. Further, even without explicit QIS initiatives, many other countries, including Russia, Germany, and Austria, are making strides in QIS research and development (R&D). The Senate has introduced three bills in the 115th Congress (S. 3143, S. 2998, and S. 3673) and the House has introduced one bill in the 115th Congress (H.R. 6227) related to QIS. These bills would establish a federal program to accelerate U.S. QIS R&D, create a National Quantum Coordination Office within OSTP, establish a Defense Quantum Information Consortium, and require the Secretary of Energy to carry out quantum information science research. The House has held three hearings related to QIS. Issues discussed in these hearings included a comparison of U.S. and international QIS R&D, and how to effectively train a QIS-knowledgeable workforce; China's investment in leading-edge technologies, including QIS, and concerns that China may be closing the gap with the United States in advanced technology R&D; and an overview of quantum computers. This report provides an overview of QIS technologies: sensing and metrology, communications, and computing and simulation. It also includes examples of existing and potential future applications; brief summaries of funding and selected R&D initiatives in the United States and elsewhere around the world; a description of U.S. congressional activity; and a discussion of related policy considerations.

On April 12, 2006, U.S. Trade Representative Rob Portman and Peruvian Minister of Foreign Trade and Tourism Alfredo Ferrero Diez Canseco signed the proposed U.S.-Peru Trade Promotion Agreement (PTPA). The labor chapter of the PTPA includes enforceable International Labor Organization (ILO) core labor standards in addition to specific obligations on domestic labor law enforcement and a labor cooperation and capacity building mechanism. Despite the June 30, 2007 expiration of presidential "fast track" or "trade promotion authority" (provided by the Trade Act of 2002 , P.L. 107 - 210 ) to negotiate agreements that Congress then considers on an expedited basis--without amendment and under limited debate--Congress passed PTPA implementing legislation, the President signed it, and it became law as P.L. 110 - 138 on December 14, 2007. It went into effect February 1, 2009. On May 10, 2007, after much negotiation, Congress and the Administration announced a "New Trade Policy for America." Pending U.S. trade agreements would be amended to incorporate "key Democratic priorities" relating to such issues as labor, the environment, access to medicine, port security, and government procurement that would "spread the benefits of globalization here and abroad by raising standards." The release also announced that "this policy clears the way for broad, bipartisan congressional support" for pending FTAs . Key concepts in the new trade-labor policy include, for FTAs, fully enforceable provisions: (1) incorporating ILO core labor standards as stated in the 1998 ILO Declaration on Fundamental Principles and Rights at Work (henceforth referred to as the ILO Declaration ); and (2) prohibiting FTA countries from weakening laws relating to ILO core labor standards in order to attract trade or investment. They also include (3) new limitations on "prosecutorial" and "enforcement" discretion, so that FTA countries cannot defend failure to enforce laws related to the ILO core labor standards on the basis of resource limitations or decisions to prioritize other enforcement issues; and (4) the same mechanisms/penalties for settling labor, environment, and all other FTA obligations. The Administration released the "final text" of the Peru FTA incorporating these concepts on June 25, 2007. On June 27, 2007, Peru's congress approved the FTA-related amendments. Other FTA language previously agreed to by both countries also includes procedural guarantees to help ensure that workers and employers would have fair, equitable, and transparent access to labor tribunals. Both parties would ensure that (1) workers have appropriate access to tribunals for the enforcement of each party's labor laws; (2) the proceedings before such tribunals are fair, equitable, and transparent; (3) the tribunals' final decisions are in writing and made publicly available; (4) parties to the proceedings have the right to seek review and possible correction of final decisions; (5) tribunals conducting or reviewing the proceedings are impartial and independent; (6) parties to the proceedings could seek remedies such as penalties or temporary workplace closures to ensure the enforcement of their rights under labor laws; and (7) public awareness of domestic labor laws is promoted through public availability of information and encouraging public education regarding labor laws. In addition, the agreement would require that the United States and Peru establish a Labor Affairs Council (Labor Council) comprised of cabinet-level or equivalent representatives to oversee implementation of the labor obligations, including the activities of the Labor Cooperation and Capacity Building Mechanism. The Labor Council would meet within the first year after the date of entry into force of the agreement and as often as necessary thereafter. Government representatives of the two countries would work together to establish priorities in specific cooperative and capacity-building activities. The Labor Council would establish guidelines, prepare reports, provide public communication, and be responsible for cooperating with the parties' points of contact. Finally, the two parties agreed that cooperation on labor issues plays an important role in advancing labor commitments, including those embodied in the 1998 ILO Declaration and a 1999 ILO convention on the worst forms of child labor (including child trafficking, or the use of children in armed conflict, drug trafficking, or pornography). They would establish a Labor Cooperation and Capacity Building Mechanism to develop and pursue bilateral or regional cooperation activities on labor-related issues. Such initiatives would be aimed at establishing and strengthening alternative dispute resolution mechanisms for labor disputes. Peruvian President Alan Garcia took office for a five-year term at the end of July 2006, replacing outgoing president, Alejandro Toledo. President Toledo presided over a period in which Peru was one of the fastest growing economies in Latin America, largely due to growth in the mining and export sectors. In spite of the recent economic growth, over half of Peruvians live in poverty and a large portion of the population is underemployed. Unemployment and underemployment levels total 64.5% nationwide. Peru's labor market is relatively small compared with that of the United States. In 2005, the labor force of Peru comprised nine million workers, compared to 151 million workers in the United States. Recorded unemployment in Peru was 7.2% and labor cost per hour was $1.48 in 2005. In comparison, the United States had a recorded unemployment rate of 4.7% and an hourly labor cost of $24.42. The economic sector in Peru with the highest employment is wholesale/retail trade and repair services, followed by manufacturing. During the regime of former President Alberto Fujimori (1990 to 2000), the government implemented a radical economic reform program to control hyperinflation and bring economic stability to the country. Part of the program included a wide-ranging privatization plan and a relaxation of foreign investment restrictions to help increase foreign investment. Existing labor laws were relaxed significantly during this time. In recent years, however, Peru has made much progress in strengthening labor protections by implementing labor law reform and protecting workers' rights. In 2002, Peru ratified the two ILO conventions on the abolition of child labor. In 2003, the government reduced the number of workers needed to establish a union, eliminated prohibitions on workers that kept them from joining unions during their probationary period, and limited the power of the labor authority to cancel a union's registration. In July 2004, the government published regulations to strengthen labor inspections and broaden labor inspectors' powers to allow easier access to firms, improved inspectors' ability to impose sanctions, and increase the levels of fines. Peru has ratified 71 ILO conventions, including all eight core conventions on workers' rights. The ILO has stated that Peru has satisfactorily amended its laws to improve labor standards in certain areas related to freedom of association and protection of the right to organize. However, some critics argue that Peru has had some problems in the observance of the ILO core labor standards and that improvements must be made in Peru's legislation on collective bargaining. The proposed PTPA was negotiated under the trade promotion authority in the Trade Act of 2002 ( P.L. 107 - 210 ) as were seven other trade agreements approved by Congress: the U.S.-Dominican Republic-Central America Free Trade Agreement (CAFTA-DR), plus agreements with Chile, Singapore, Australia, Morocco, Bahrain, and Oman; and several agreements that are still pending (Colombia, Panama, and South Korea.) While many provisions of the free trade agreements (FTAs) are similar, the Peru TPA was the first to incorporate provisions reflecting the new congressional-administration trade policy. In addition, each of the eight agreements has some unique provisions. For the PTPA, unique labor provisions include some new reporting requirements and cooperative and trade-capacity building activities. Proponents and opponents typically cite the following strengths and weaknesses of the labor provisions of the PTPA. Supporters argue that the PTPA reinforces Peru's labor reforms in 2003, 2004, and 2005. In addition, enforceable ILO core labor standards in the body of the agreement overlay and reinforce Peru's long-term ratification of 71 ILO labor conventions including all eight ILO core labor standards--two in each of the following categories: (1) the right to organize and bargain collectively (ILO Convention (C) 87 in 1960 and C98 in 1964); (2) freedom from forced or compulsory labor (C29 and C105, both in 1960); (3) prohibitions against child labor (C138 and C182, both in 2002); and (4) prohibitions against employment discrimination (C100 in 1960 and C111 in 1970). Proponents point out that "key Democratic priorities" include fully enforceable ILO core labor standards and the same dispute resolution procedures that were available for commercial disputes. The PTPA would go beyond protections afforded Peru under the Andean Trade Preference Drug Enforcement Act (ATPDEA, P.L. 107 - 210 ) and the Generalized System of Preferences (GSP, P.L. 98 - 573 , as amended), which set, for benefits eligibility, the lower standard of " providing or taking steps to provide " workers "internationally recognized worker rights." Critics argue that, with enforceable ILO core labor standards in the language of the agreement, the main issues at this point are Peru's adoption of new labor laws and enforceability. They argue that recent Peruvian labor reforms have not reversed the weakening of labor laws during the Fujimori administration, and that both ILO reports and the 2005 State Department's Country Reports on Human Rights Practices document the failure of Peru's compliance with U.S. internationally recognized worker rights and ILO core labor standards. Such "failures" include (1) the lack of basic protection of the right to organize for (a) large numbers of workers "casually" employed as temporary or contract workers (and therefore not permitted to join labor unions of permanent workers) and (b) the 60% of all Peruvian workers in the largely unregulated informal sector; (2) reports of forced or compulsory labor practices, particularly involving indigenous families in remote areas, in violation of Peru's laws; (3) violations of child labor laws--an estimated one-fourth of all children between 6 and 17 years of age are employed, mostly in the informal sector including some in prostitution and narcotics production; and (4) non-compliance with minimum wage guideline s, in that roughly half the workforce earned the minimum wage or below, many of them in the informal sector. Before the new PTPA language was released, some observers noted that the United States has ratified only two ILO conventions, while Peru has ratified all eight. In addition, the United States has some laws that may not totally conform with language of ILO conventions. A possible example is some state laws that permit employment-without-pay for prisoners. Consequently, they express concern that including enforceable ILO core labor standards into trade agreements could subject the entire U.S. labor code to challenges by trading partners. This issue is addressed by language in the PTPA that (a) restricts the application of the PTPA provisions to trade-related matters and (b) incorporates only the principles of the four basic ILO rights listed in the ILO Declaration and quoted on p. 4, footnote 2, rather than the detailed language of the specific eight conventions. The proposed PTPA is unlikely to impact the aggregate employment level in the United States: U.S.-Peru trade accounts for only 0.3% of total U.S. merchandise trade (2005). However, it could impact jobs in specific industries. According to a report by the U.S. International Trade Commission (USITC), the largest U.S. employment gain (1%) is projected in wheat production. Declines are projected in metals (gold, copper, and aluminum), rice production, and miscellaneous crops (cut flowers, live plants, and seeds) which could "lose" up to 0.2% of their employment, displaced by imports. For Peru, various estimates of job "gains" range from less than 20,000 to 700,000. On the other hand, some labor groups argue that U.S. exports of basic grains could adversely affect the livelihoods of subsistence farmers in Peru, where agriculture is the main source of jobs. The Peruvian Congress voted 79-14 to approve the PTPA in June 2006 and it approved a set of amendments tied to the FTA on June 27, 2007. Gaining passage of a PTPA was a high priority for the government of Peru. Peruvian President Alan Garcia Perez met with President Bush on October 10, 2006, and again on April 23, 2007, to discuss the free trade agreement. After the April 2007 meeting, President Garcia said about the agreement, "It is vital for our country. It is fundamental to continue this path of growth and social redistribution that we have started in my country." House Democratic leaders had indicated they would not take up implementing legislation until after Peru changed its laws to comply with new labor (and other) provisions added to the PTPA. Peru is implementing its new labor obligations under the agreement through a series of "supreme decrees" issued by President Garcia. Peru had agreed to issue supreme decrees covering five areas: time-limited contracts, subcontracting, the right to strike, anti-union discrimination, and safeguarding the right to strike. The House passed the Peru TPA implementing legislation, H.R. 3688 , on November 8, 2007, by a vote of 285 to 132; the Senate passed it on December 4 by a vote of 77 to 18; and President Bush signed it into law as P.L. 110 - 138 on December 14, 2007. Issues included how a PTPA might affect workers in both countries, and Peru's commitments to reforms, alleviating poverty, and enforcement. Some Peruvian policymakers believe that maintaining confidence in the bilateral trade environment with the United States is the key to the long-term stability of the region. While the Chamber of Commerce and the Business Roundtable strongly supported the Peru TPA, the AFL-CIO neither supported nor opposed it because the AFL-CIO has labor unions on both sides of the issue. Change To Win labor coalition, comprised of labor unions that formerly belonged to the AFL, urged Congress to oppose the PTPA.

On April 12, 2006, the United States and Peru signed the proposed U.S.-Peru Trade Promotion Agreement (PTPA). On June 25, 2007, the Administration released a revised text with new labor, environment, and other provisions. This "final text" language reflected a Congress-Administration "New Trade Policy for America" announced on May 10 that incorporated key Democratic priorities. Supporters of the agreement argue that Peru has ratified all eight International Labor Organization (ILO) core labor standards and that the PTPA would reinforce Peru's labor reform measures of recent years. Critics are concerned about the potential for enforcement of the standards. Peru PTA implementing legislation (H.R. 3688) passed the House on November 8, 2007, by a vote of 285 to 132; passed the Senate on December 4 by a vote of 77 to 18; and was signed by President Bush on December 14 (P.L. 110-138). It went into effect on February 1, 2009. See also CRS Report RL34108, U.S.-Peru Economic Relations and the U.S.-Peru Trade Promotion Agreement, by [author name scrubbed], and CRS Report RL33864, Trade Promotion Authority (TPA) Renewal: Core Labor Standards Issues, by [author name scrubbed].

The Pacific Alliance is a regional integration initiative comprised of Chile, Colombia, Mexico, and Peru. Costa Rica and Panama are candidates for becoming full members. The Alliance was created on April 28, 2011, in Lima, Peru, when the heads of state of Chile, Colombia, Mexico, and Peru signed a Presidential Declaration for the Pacific Alliance , now known as the Lima Declaration, to facilitate the free flow of goods, services, capital, and people. The United States officially joined the Alliance as an observer on July 18, 2013. The project was an initiative of then-Peruvian President Alan Garcia, who extended the invitation to his counterparts in Chile, Colombia, and Mexico, with the purpose of deepening the integration of these economies. The initiative was developed as a way to supplement existing trade agreements among the four countries. The goal is for the four countries to act as a unified economic bloc to negotiate and trade with other countries. The Alliance is making efforts to liberalize trade in goods and services, open foreign investment, integrate securities markets, and allow the free movement of people among member countries. It has shared values in regard to the respect for rule of law, democracy, and protection of human rights, though the current focus is on liberalizing and increasing trade and investment. Member governments have committed to open markets, free trade policies, fiscal stability, openness to foreign investment, and strengthening trade relations with the Asia-Pacific region. Pacific Alliance members are aiming to form deeper integration that boosts economic growth, development, and competitiveness of their economies by progressively seeking free movement of goods, services, capital, and people. Another key goal is for the Alliance to become a platform for economic and trade integration with a clear focus on the Asia-Pacific region. The stated objectives of the Pacific Alliance consist of the following: Build, in a participatory and consensual manner, an area of deep economic integration and to move gradually toward the free circulation of goods, services, capital, and people. Promote the growth, development and competitiveness of the Parties' economies, aiming at achieving greater welfare, overcoming socioeconomic inequalities, and achieving greater social inclusion of their residents. Become a platform for political articulation, and economic and trade integration, while projecting these strengths to the rest of the world, particularly the Asia-Pacific region. The Alliance was formally established in a Framework Agreement on June 6, 2012, during a presidential summit in Antofagasta, Chile. This agreement is the legal instrument that creates the institutional basis of the regional integration initiative. It also defines the objectives of the alliance and establishes the requirements for the future participation of other countries. The four members already have in place bilateral free trade agreements amongst each other and have agreed to coordinate efforts regarding development agencies, electronic trade, services, and tourism. The Pacific Alliance is the first major trade integration effort in the region since the creation of the Southern Common Market (Mercosur) over 20 years ago. The framework agreement contains the parameters, institutional architecture, and rules that govern the Alliance. It establishes certain requirements for a country to be a member of the Alliance. These requirements state that Alliance members must be democracies; practice the separation of the powers of state; and protect, promote, and guarantee human rights and fundamental liberties. A key requirement is that member countries must have existing bilateral trade agreements with all other member countries. As shown in Figure 1 , current members of the Pacific Alliance are Chile, Colombia, Mexico, and Peru. The economies of the four countries are among the most liberalized in the world. Chile has 22 free trade agreements linking it to 60 countries, including the European Union (EU), the United States, China, Japan, and South Korea. Colombia has 12 free trade agreements (FTAs) involving 30 countries, while Mexico has 12 FTAs with 44 countries, including the United States, China, and the EU. Peru has 15 FTAs with 50 countries. Pacific Alliance countries have a total of 15 FTAs with countries in the Asia-Pacific region. In comparison, Mercosur has four FTAs. Both Mexico and Chile are also members of the Organization for Economic Cooperation and Development (OECD), and Colombia has applied for membership. The coming together of these four countries indicates that they have similar political and economic objectives, recognize their commitment to free trade, and are interested in increasing trade ties with the Asia-Pacific region. Costa Rica is a candidate to become the Alliance's first new member. In February 2014, Costa Rica signed a Declaration on the Intent to the Framework Agreement, which establishes the roadmap for Costa Rica to become a full member of the Alliance. It must comply with the requirement to have FTAs with each of the member countries. Costa Rican President Solis has said he supports enrollment, but has asked several agencies for input in evaluating the possible effects of becoming a full member country. Costa Rica currently has trade agreements in force with Chile, Mexico, and Peru, and has signed an FTA with Colombia that is awaiting approval. Panama is also a candidate for joining once it complies with all the requirements. It has free trade agreements in force with Chile and Peru, and has an agreement with Colombia that was signed in September 2013 and is awaiting approval. Panama has also initiated FTA negotiations with Mexico. Panama and Costa Rica have an FTA that entered into force on November 23, 2008. The Pacific Alliance has 42 observer countries: the United States, Australia, Austria, Belgium, Canada, China, Costa Rica, Denmark, Dominican Republic, Ecuador, El Salvador, Finland, France, Georgia, Germany, Greece, Guatemala, Haiti, Honduras, Hungary, India, Indonesia, Israel, Italy, Japan, Morocco, Netherlands, New Zealand, Panama, Paraguay, Poland, Portugal, Singapore, South Korea, Spain, Sweden, Switzerland, Thailand, Trinidad and Tobago, Turkey, United Kingdom, and Uruguay. Under Article 10 of the Framework Agreement, countries that have FTAs with at least half of the member countries may apply for observer status to the Pacific Alliance. Their status as observer countries will be approved only upon unanimous consent of the Council of Ministers. The Council of Ministers is responsible for defining the conditions under which a country may participate as an observer. While their role is limited, observer countries are able to build relationships with Alliance members and other observer countries through ongoing activities and programs related to trade, market access to Asian and other global markets, small and medium enterprises, science and technology, education and other trade promotional opportunities. Some analysts state that observers to the Alliance may benefit from gaining increased access to Asia Pacific trade links. Observer status may help countries better understand the issues being negotiated in the Alliance and could help a country ultimately decide if wants to join as a member. One of the goals in the case of Australia, for example, would be to diversify trade by going beyond supplying the energy and minerals that have dominated its trade with Asia. While that particular trade pattern has led to a substantial increase in Australia's gross domestic product, it has not resulted in higher productivity, which would be necessary to raise living standards. In the case of Spain, Spanish Prime Minister Mariano Rajoy stated that the alliance could be a gateway to the booming Asia-Pacific region. Other European leaders have made similar statements. The Presidents of the four countries make up the final decision-making body of the Alliance. They meet at formal presidential summits in different locations. In addition, there are several organizational institutions that are responsible for overseeing the objectives and technical aspects of the Alliance. The Council of Ministers is comprised of the foreign affairs and economic ministers of member countries. The council is responsible for making major decisions related to the objectives of the alliance; evaluating progress and results; approving programs and activities; defining the political guidelines related to the integration process; and other related activities. The High Level Group consists of member countries' vice-ministers of foreign affairs, commerce, and trade. It is charged with assessing the progress made by the technical working groups; identifying new areas in which the Alliance can further its objectives; and preparing proposals for interacting or cooperating with other entities or regional groups. The Pacific Alliance countries established numerous working groups to address specific aspects of the negotiations and internal matters. Some of these issues, such as government procurement and regulatory cooperation, are related to provisions that are covered in existing FTAs and to ongoing discussions in the TPP negotiations. Working groups include the following: Institutional Affairs. This working group was created to focus on commitments made by the High Level Group with regard to issues such as institutions, conflict resolution, rules and guidelines, and legal affairs. The group is also charged with writing pertinent procedural guidelines for the Alliance's internal organizations and groups. Regulatory Coherence. This group aims to establish tools for the implementation of policies for greater transparency, public consultation, regulatory impact, and simplification of government regulations. Trade and Integration Group. This group focuses on the trade integration of Pacific Alliance members. The goal is to move progressively closer to the free movement of goods and services and generate a greater dynamism in the flow of trade between countries. The group is active in negotiating provisions on tariff elimination, rules of origin, technical barriers to trade, sanitary and phytosanitary measures, trade facilitation, and customs cooperation. Business Council Committee of Experts. This group was created to represent business interests and to analyze topics recommended by member country business sectors. The business committee serves as a coordinating body and liaison between private sector interests and proposals and the Pacific Alliance. Public Purchasing /Government Procurement. This group focuses on establishing commitments on government procurement opportunities for Pacific Alliance countries. Technical Cooperation. This group helps to promote broad cooperation among member countries with a special focus on the environment and climate change, innovation, science and technology, social development, academic and student exchange, and tourism. Communication strategy. This working group designs and implements communication strategies to help the Pacific Alliance achieve worldwide recognition as a model for integration, economic and commercial development, competitiveness, and effective cooperation among its members in the global economy. Movement of Business People and Facilitation of Migration. One of the priorities of the Pacific Alliance is the free movement of business people and the facilitation of migration transit, including cooperation with immigration officials and the consular police. This group focuses on migratory movement and the free flow of business people, consular cooperation and work-study programs for students, as well as cooperation and information exchange on migration flows. Intellectual Property. This working group focuses on exploring methods for closer cooperation among member countries in order to strengthen intellectual property rights protection in the region. Small and Medium-Sized Enterprises (SMEs). This technical group was designed to deepen the coordination of best public policy practices that support, strengthen, and modernize small and medium-sized enterprises. Services and Capital. This group focuses on services trade, including e-commerce, investment negotiations, cross-border trade in services, financial services, telecommunications, air and maritime transport, and professional engineering services. This group also works on the integrated stock exchanges among member countries. External Relations Group. The purpose of this group is to design a strategy for external relations with observer countries and third parties to help promote the objectives of the Alliance. Fiscal Transparency. The governments of Pacific Alliance countries are committed to fiscal transparency and the fight against tax evasion. They agreed to incorporate high standard tax information exchange policies. This technical group is working on concluding a Pacific Alliance tax information exchange agreement. Leaders of the member countries of the Pacific Alliance have held numerous presidential summits. These include the following: 1. Lima, Peru, April 28, 2011. The Heads of State of Chile, Colombia, Mexico, and Peru agreed on the Declaration of Lima establishing the Pacific Alliance with the goal of advancing towards the free flow of goods, service, capital, and people. Panama was invited to participate in the process as an observer. 2. Merida, Mexico, December 4, 2011. The Presidents of the four Pacific Alliance countries agreed to sign a Pacific Alliance Treaty within six months. 3. Cartagena, Colombia , March 15, 2012 (via teleconference). During this conference, Costa Rica was included as an observer. 4. Antofagasta, Chile, June 6, 2012 . The four countries formally entered into a Framework Agreement establishing the Pacific Alliance. The Framework Agreement is a legal instrument creating the institutional basis of the initiative, defining its objectives, and establishing the requirements for future negotiations and participation of other countries in the region. 5. Cadiz, Spain, November 17, 2012 . Mexico announced the exemption of visa requirements for Colombians and Peruvians for up to 180 days. Australia, Canada, Spain, New Zealand and Uruguay were welcomed as observers. 6. Santiago, Chile, January 26, 2013. The four Heads of State agreed that the negotiations that were underway at the time would be concluded by June 30, 2013. 7. Cali, Colombia , May 23, 2013. The four countries invited Costa Rica to become the Alliance's first new member. The Alliance also announced an agreement to remove tariffs on 90% of the goods traded within the bloc and completed negotiations on trade facilitation and customs cooperation provisions. Over 450 business representatives from 14 countries attended the summit. 8. Cartagena, Colombia, February 10, 2014 . Presidents of Pacific Alliance countries signed the Additional Protocol of the Framework Agreement for the Pacific Alliance. The Additional Protocol immediately eliminated 92% of tariffs between members, and gradually will phase out the remaining 8% of tariffs over a seven-year period. 9. Punta Mita, Mexico, June 19 -20, 2014 . The four presidents signed the Declaration of Punta Mita, by which they seek to strengthen the objectives and guidelines of the Alliance, including the free movement of goods and services, capital and people. They announced the approval to incorporate the Mexican Stock Exchange into the common stock exchange, the Latin American Integrated Market, or the Mercado Integrado Latinoamericano (MILA), which is expected in the fourth quarter of 2014. Other highlights of the summit included the signing of an Inter-institutional Agreement for a Work and Holiday Program, the launch of a scholarship program, and the announcement of a plan for promoting small businesses through financing, investment, and support networks. Two new countries were admitted as observers: Belgium and Trinidad and Tobago. 10. Paracas, Peru , July 1-3, 2015 . Mexico handed over the pro tempore presidency of the Pacific Alliance to Peru. The four presidents reaffirmed their commitment to the principles included in the Framework Agreement and to continuing their cooperative efforts to achieve higher economic growth, promote economic development, increase competitiveness, and diversify trade flows to the Asia-Pacific region. They also expressed their willingness to continue strengthening cooperation with observer states. During this Summit 10 new countries were admitted as observers: Austria, Denmark, Georgia, Greece, Haiti, Hungary, Indonesia, Poland, Sweden and Thailand. The four countries have taken numerous steps to accomplish their objectives. In addition to eliminating tariffs between member countries, they are organizing trade promotion activities; facilitating the movement of tourists and business people among member countries; liberalizing services trade; integrating their stock markets; and opening joint embassies in various countries. Alliance members have embraced open trade since the 1980s and 1990s, either through unilateral trade liberalization or through FTAs. They signed an agreement in 2013 to eliminate tariffs on 92% of merchandise trade, with the remainder to be freed by 2020. The parliaments of all four countries have approved the agreement and it is expected to take effect in the first half of 2016. Members have actively participated in bilateral and multilateral trade liberalization and have aligned with countries that are also seeking to accomplish, bilaterally and regionally, what has not been possible to accomplish through the World Trade Organization (WTO). They have entered into FTAs with all other Alliance countries and also with the United States, Canada, and the EU. They all have trade linkages with Asian countries through regional trade agreements or by other means. China, Japan, South Korea, and Singapore, and India have all concluded agreements with at least two Pacific Alliance members. While these agreements may have significantly liberalized trade, some are more comprehensive than others and not all have brought tariff levels down to zero. The trade promotion agencies of Chile, Colombia, Mexico, and Peru (ProChile, Proexport Colombia, ProMexico, and PromPeru) are combining their efforts to promote exports, attract foreign direct investment, and promote tourism in the Alliance countries. They have worked together to program activities in 18 countries, including Australia, Canada, China, Colombia, France, Germany, India, Japan, Mexico, the Netherlands, Peru, Russia, South Korea, Spain, Switzerland, Taiwan, Turkey, and the United Arab Emirates. These activities include major business forums for entrepreneurship and innovation, meetings of tourism operators for the design of products and packages, educational seminars, trade fairs with emphasis on agribusiness, and other trade promotion activities, many of which involve small and medium-sized businesses. The Declaration of Lima established that the Alliance would prioritize the movement of business people and the facilitation of migration transit. This provision is intended to facilitate not only the movement of business people, but also tourists and those in transit between the member countries. Alliance members view the free movement of people as a tool for achieving deeper integration, growth, and competitiveness. In November 2012, Mexico announced the elimination of visas for nationals from Colombia and Peru for stays of up to 180 days. Chilean nationals were already able to travel to Mexico without visas. Mexico's removal of visa requirements includes any activities for which travelers have received no income, such as tourism, transit, or business travel. In May 2013, Peru announced the elimination of visas for business people from Chile, Colombia, and Mexico for up to 183 days, provided that they carry out an unpaid activity in the country. Member countries also adopted measures for greater mobility of people from member countries for periods up to six months, provided that the activities they carry out are unpaid. Alliance members are currently working on expanded facilitation measures for migration transit, agreements for the greater mobility of young people to travel and work, and mechanisms for consular cooperation. The Alliance seeks to achieve the free movement of services and capital between its members, basing its work on two major goals: 1) to position itself as an attractive destination for investment and trade in services, and 2) to increase investment flows and trade in services among its members and with the rest of the world. It established a joint committee to improve the investment climate and boost services trade. The Pacific Alliance's Group of Services and Capital is working to establish conditions that will facilitate and promote trade in services and intra-regional investment. It completed negotiations on chapters on services trade, investment, electronic commerce, maritime services, and telecommunications. In 2011, Chile, Colombia, and Peru integrated their stock exchanges through the formation of the Latin American Integrated Market, or the MILA. On July 24, 2014, S&P Dow Jones Indices, a provider of financial market indices, announced the launch of the S&P MILA Pacific Alliance Indices. Mexico's stock exchange carried out its first operation as a member of the MILA on December 2, 2014. Member countries have signed various agreements to share use of their facilities or embassies and consulates to further advance the objectives of the integration process. As part of these agreements, joint embassies are now in operation in Ghana (Chile, Colombia, Mexico, and Peru), Vietnam (Colombia and Peru), Morocco (Chile and Colombia), Algeria (Chile and Colombia), Azerbaijan (Chile and Colombia), and a diplomatic mission to the Organization for Cooperation and Economic Development (Chile and Colombia). In addition, Mexico and Colombia are to open an embassy in Singapore. The Alliance expects that by having joint embassies, they can strengthen their presence around the world and reduce the operation costs of these missions. Up until 2013, Pacific Alliance members had some of the fastest-growing economies in the region. In 2013, Peru had the highest percentage change in real GDP at 5.7%, compared to 2.9% for the entire Latin American region. In 2015, GDP growth was 0.0% for all of Latin America and less than 3% for each of the Pacific Alliance countries (see Table 1 ). The four Latin American countries account for 37% of Latin America's population, 35% of Latin America's nominal GDP, 46% of exports and 50% of total imports. Mexico, however, accounts for much of the economic strength of the group. It represents 57% of the Alliance's population, 61% of the GDP, and 70% of exports as shown in Table 1 . In 2014, foreign direct investment (FDI) flows into Latin America and the Caribbean (LAC) fell by about 16% to $158.8 billion. Inflows to Pacific Alliance countries also decreased, by 23% to $68.5 billion (see Table 2 ). In 2013, inflows reached a record high of $190.0 billion. This was 4% above the 2012 level and continued an upward trend beginning in 2009. The recent decline in FDI inflows and outflows were likely driven by the decline of prices in export commodities and the economic slowdown in the region. FDI remains important for the four economies. Pacific Alliance countries have accounted for over 40% of FDI flows to LAC countries since 2009 as shown in Table 2 . As shown in Figure 2 , the United States is a significant trading partner for all four countries. It is by far Mexico's most important trading partner, accounting for 49.1% of Mexico's imports and 78.8% of Mexico's exports in 2013. The United States is the leading supplier of goods imported by all four members. In exports, the United States ranks among the top two destinations for exports from these countries. China also is a significant trading partner for member countries and, in the case of Chile, ranks first among its export markets. U.S. merchandise imports from Pacific Alliance countries totaled $320.7 billion in 2013, a 1% increase over the 2012 amount of $318.0 billion. U.S. imports from all four countries increased 113% between 2003 and 2013. Mexico supplies 87% of U.S. imports from the Pacific Alliance as shown in Figure 3 . Exports to Pacific Alliance countries totaled $272.1 billion in 2013, a 5% increase over the 2012 amount of $260.4 billion. U.S. exports to these countries increased nearly 160% between 2003 and 2013. Mexico accounts for over 80% of U.S. exports to the four countries as shown in Figure 3 . Vehicles and vehicle parts rank first among U.S. imports from the four countries, accounting for 19% of the total; followed by electrical machinery, televisions, parts, and accessories (18%); mineral fuels (16%); nuclear reactors and mechanical appliances (13%); and natural or cultured pearls and imitation jewelry (4%). Leading U.S. export items to all Pacific Alliance countries include nuclear reactors, machinery, and mechanical appliances (17% of total); electrical machinery, televisions, parts, and accessories (15% of total); mineral fuels (14% of total); vehicles (9% of total); and plastics (6% of total). A key difference between the Pacific Alliance and other Latin American regional integration initiatives is its overt, outward-oriented focus, whereas historically, Latin American trade pacts have been more inward-oriented, such as the South American trading bloc Mercosur. Some analysts see the Pacific Alliance as a potential rival to Mercosur, the Common Market of the South, which has not yet achieved its goal of a common market. If the Alliance proves successful, it could put pressure on Brazil and other Mercosur countries to adopt more outward-looking and open trade policies. Some observers view the Pacific Alliance as a "convergence experiment" within a complex web of free trade agreements in Latin America. It is different from other initiatives because it represents a more pragmatic approach to build upon existing FTAs for further economic integration and to serve as an export platform to the Asia-Pacific region. Major strengths of the Alliance are the shared values among member countries, the high level of expertise among the negotiators, and the experience of all four countries in negotiating free trade agreements. All four countries have experienced negotiators who worked on past agreements and are part of the institutions that have been created thus far as part of the Alliance. Businesses are expressing much interest in the Alliance. They are actively participating in the numerous trade events organized by the Alliance and look upon its numerous accomplishments that have been achieved in such a short period of time as positive signals for trade and investment opportunities. The U.S. Chamber of Commerce supports the establishment of trade ties with Pacific Alliance countries. On October 10, 2013, it hosted a forum with Pacific Alliance finance ministers in Washington, DC. Many U.S. businesses have participated in the two matchmaking forums organized by the Alliance. As the four countries deepen their efforts and add new members to the group, they may face challenges in sustaining the current dynamism and focus. One of the major challenges is that trade among the partner countries is low and the countries are a long way from exporting goods entirely made within the region. Member countries may have to make considerable efforts and heavily involve the private sector to create supply chains. They may have to focus on developing the appropriate policies to create conditions within the region that would allow for the development of supply chains. There also may be challenges in increasing trade linkages with Asian countries. Attempts to expand trade liberalization measures with other countries may prove difficult because of the potential complexities in coordinating and managing these efforts. Although the Alliance has drawn much international attention, the future of the regional trade initiative is uncertain. According to one Latin America policy expert, there may be a "disconnect to some extent between some of the great projections and expectations and the real continuing deficiencies in key areas like infrastructure." One of the major strengths of the initiative is that member countries share similar economic goals. These similarities can provide the pragmatic flexibility to move forward together on their objectives. As long as member countries focus on trade and investment, and not politics, the likelihood for deeper integration may be greater. Some observers believe that the Pacific Alliance can serve as a "hub for knitting together FTAs with Latin American partners and linking up to the proposed Trans-Pacific Partnership and Transatlantic Trade and Investment Partnership." Other observers contend that the Alliance may fall victim to past patterns of regional initiatives and lose its momentum. The government of Chilean President Michelle Bachelet expressed concerns about moving ahead with the Pacific Alliance if it meant leaving other countries in the region behind. In June 2014, Chile's former President Ricardo Lagos and Brazil's former President Luiz Inacio Lula da Silva expressed their view that the Alliance would be more effective in achieving its goals by first deepening the trade relationship with Argentina and Brazil. These views may have prompted the Alliance to reach out to representatives from South America's big trade bloc Mercosur. Three of the four Pacific Alliance members (Chile, Mexico, and Peru) are parties to the Trans-Pacific Partnership agreement, a proposed FTA among 12 countries, including the United States, which aims to liberalize trade in goods and services, remove barriers to foreign investment, and enhance trade rules and disciplines on a range of issues. While the Pacific Alliance has a larger scope than the proposed TPP since it involves the free movement of business people for certain time periods and an integration of the stock markets of member countries, numerous observers have noted that the two could be complementary agreements.

The Pacific Alliance is a regional integration initiative formed by Chile, Colombia, Mexico, and Peru on April 28, 2011. Its main purpose is for members to form a regional trading bloc and forge stronger economic ties with the Asia-Pacific region. Costa Rica and Panama are candidates to become full members once they meet certain requirements. The United States joined the Alliance as an observer on July 18, 2013. The United States has free trade agreements with all four countries and has significant trade and foreign policy ties with the region. The Pacific Alliance is of interest to Congress because of the role of the United States as an observer country and also because of the strong linkages between the United States and the member countries. It may also be of interest to Congress in the context of the proposed Trans-Pacific Partnership (TPP) agreement. Three of the four Pacific Alliance member countries are parties to the TPP. The Alliance was officially created when the heads of state of Chile, Colombia, Mexico, and Peru signed a Presidential Declaration for the Pacific Alliance, now known as the Lima Declaration. The objectives are to build an area of deep economic integration; to move gradually toward the free circulation of goods, services, capital, and persons; to promote economic development, regional competiveness, and greater social welfare; and to become a platform for trade integration with the rest of the world, with a special emphasis on the Asia-Pacific region. One of the requirements for membership is that a country must have free trade agreements with all other member countries. The four member countries have embraced free trade as far back as the 1980s and have multiple free trade agreements with many countries, including the United States, Canada, China, and the European Union. They represent 37% of Latin America's population, 35% of its total GDP; 46% of its exports, and 50% of its imports. Mexico accounts for much of the economic strength of the group, representing 61% of the combined gross domestic product. Observer countries play an important role within the Alliance. Being an observer country may help a country better understand the issues being negotiated and also provides opportunities for participation in activities such as trade forums and educational seminars. The Alliance has 42 observer countries, including the United States, Australia, Canada, China, several Central and South American countries, numerous European countries, Israel, Japan, Turkey, and others. The Alliance's approach to trade integration is often looked upon as a pragmatic way of deepening economic ties. It is more outward focused than other regional initiatives such as the Common Market of the South (Mercosur). Another unique characteristic is that the four member countries share similar economic and political ideals and are moving forward quickly to accomplish their goals. Member countries have signed various agreements to share use of their facilities or embassies and consulates to further advance the objectives of the integration process. In February 2014, Presidents of Pacific Alliance countries signed the Additional Protocol of the Framework Agreement, which immediately eliminated 92% of tariffs among members. Some analysts see the Pacific Alliance as a potential rival to Mercosur and have noted that it could put pressure on other Latin American countries to pursue more market-opening policies. The Alliance has a larger scope than free trade agreements, such the proposed TPP, since the Alliance involves the free movement of people and includes measures to integrate the stock markets of member countries.

Debarment and suspension (collectively known as "exclusion") are of perennial interest to Congress because exclusion is one of the primary techniques that federal agencies use to avoid dealings with vendors who have failed, or are deemed likely to fail, to meet their obligations under federal law or government contracts. Debarred contractors are generally ineligible for new federal contracts for a fixed period of time, while suspended contractors are generally ineligible for the duration of any investigation or litigation involving their conduct. Federal law specifies various grounds for exclusion, only some of which expressly relate to procurement. The grounds and procedures for nonprocurement exclusions are outside the scope of this report. However, all persons excluded on procurement or other grounds are listed in the System for Award Management (SAM) (previously the Excluded Parties List System (EPLS)). Contracting officers are generally barred from soliciting offers from, awarding contracts to, or consenting to subcontracts with contractors who are listed as excluded in SAM. This report discusses grounds and procedures for procurement-related exclusions. In particular, it surveys the authorities requiring or allowing federal agencies to debar or suspend contractors, as well as the due process and other protections for contractors in exclusion proceedings. Contractors can currently be debarred or suspended under federal statutes or under the Federal Acquisition Regulation (FAR), an administrative rule governing contracting by executive branch agencies. There are only two explicit overlaps between the causes of debarment and suspension under statute and those under the FAR, involving debarments and suspensions for violations of (1) the Drug-Free Workplace Act of 1988 and (2) various statutes proscribing intentionally affixing a "Made in America" label to an ineligible product sold in or shipped to the United States. However, the FAR includes certain "catch-all" provisions that could potentially make the same conduct grounds for debarment or suspension under statute and under the FAR. One of these provisions authorizes debarment for "any ... offense indicating a lack of business integrity or business honesty." The other authorizes debarment or suspension for "any other cause of [a] serious or compelling nature." Some federal statutes include provisions specifying that contractors who engage in certain conduct prohibited under the statute shall or may be debarred or suspended from future contracts with the federal government. Such debarments or suspensions are often referred to as "statutory debarments" or "statutory suspensions" because they are expressly provided for in statute. They are sometimes also described as "inducement debarments" or "inducement suspensions" because they are designed to provide additional inducement for contractors' compliance with the statutes. Statutes providing for debarment and suspension often require that the excluded party be convicted of wrongdoing under the statute, but at other times, findings of wrongdoing by agency heads suffice for exclusion. Sometimes the exclusion applies only to certain types of contractors, or dealings with specified agencies (e.g., institutions of higher education who contract with the government, contracts with the Department of Defense). Most of the time, however, the exclusion applies more broadly to all types of contractors dealing with all federal agencies. Persons identified by statute--often the head of the agency administering the statute requiring or allowing exclusion--make the determination to debar or suspend contractors. Debarments last for a fixed period specified by statute, while suspensions last until a designated official finds that the contractor has ceased the conduct that constituted its violation of the statute. Generally, statutory exclusions can only be waived by a few officials under narrow circumstances. Heads of procuring agencies generally cannot waive exclusions to allow debarred or suspended contractors to contract with their agency. Table 1 surveys the procurement-related statutory exclusions presently in effect. It attempts to be comprehensive, listing all such exclusions codified in the United States Code (including as notes). It does not list any un-codified provisions that may exist. As a matter of policy, the federal government seeks to "prevent improper dissipation of public funds" in its contracting activities by dealing only with responsible contractors. Debarment and suspension promote this policy by precluding agencies from entering into new contracts with contractors whose prior violations of federal or state law, or failure to perform under contract, suggest they are nonresponsible. However, because exclusions under the FAR are designed to protect the government's interests, they may not be imposed solely to punish prior contractor misconduct. Federal courts could overrule challenged agency decisions to debar contractors when agency officials seek to punish the contractor--rather than protect the government--in making their exclusion determinations. Where grounds for debarment or suspension exist, as discussed below, any agency may act to exclude the contractor, potentially including one that does not currently have a contract with the contractor or is not the contractor's "primary" business partner. In practice, though, exclusions are most commonly initiated by the agency under or in regard to whose contract or proposed contract the alleged misconduct occurred. The FAR authorizes agency officials to debar contractors from future contracts under three circumstances. First, debarment may be imposed when a contractor is convicted of or found civilly liable for any so-called "integrity offense." Integrity offenses include fraud or criminal offenses in connection with obtaining, attempting to obtain, or performing a government contract or subcontract; violations of federal or state antitrust laws relating to the submission of offers; embezzlement, theft, forgery, bribery, falsification or destruction of records, making false statements, tax evasion, violating federal criminal tax laws, or receipt of stolen property; intentionally affixing a "Made in America" label, or similar inscription, on ineligible products; and other offenses indicating a lack of business integrity or honesty that seriously and directly affect the present responsibility of a contractor or subcontractor. Second, in the absence of convictions or civil judgments, debarment may be imposed when government officials find, by a preponderance of the evidence, that the contractor committed certain offenses. These offenses include serious violations of the terms of a government contract or subcontract; violations of the Drug-Free Workplace Act of 1988; intentionally affixing a "Made in America" label, or similar inscription, on ineligible products; commission of an unfair trade practice as defined in Section 201 of the Defense Production Act; delinquent federal taxes in an amount exceeding $3,000; and knowing failure by a principal to timely disclose to the government credible evidence of (1) violations of federal criminal laws involving fraud, conflict of interest, bribery, or gratuity offenses covered by Title 18 of the United States Code; (2) violations of the civil False Claims Act; or (3) significant overpayments on the contract that occurred in connection with the award, performance or closeout of a federal contract or subcontract and were discovered within three years of final payment. Debarment can also result, under this provision of the FAR, when the Secretary of Homeland Security or the Attorney General finds, by a preponderance of the evidence, that a contractor has not complied with the employment provisions of the Immigration and Nationality Act. Third, and finally, debarment may be imposed whenever there exists "any other cause of so serious or compelling a nature that it affects the present responsibility of a contractor." Debarments last for a "period commensurate with the seriousness of the cause(s)," generally not exceeding three years. As discussed below, due process generally requires that contractors receive written notice of and the opportunity for a hearing regarding any debarment. Debarment-worthy conduct by a contractor's officers, directors, shareholders, partners, employees, or other associates can be imputed to the contractor, and vice versa. The FAR also allows agency officials to suspend government contractors when they suspect, upon adequate evidence, any of the following offenses, or when contractors are indicted for these offenses: fraud or criminal offenses in connection with obtaining, attempting to obtain, or performing a public contract; violation of federal or state antitrust laws relating to the submission of offers; embezzlement, theft, forgery, bribery, falsification or destruction of records, making false statements, tax evasion, violations of federal criminal tax laws, or receipt of stolen property; violations of the Drug-Free Workplace Act of 1988; intentional misuse of the "Made in America" designation; unfair trade practices, as defined in Section 201 of the Defense Production Act; delinquent federal taxes in an amount exceeding $3,000; knowing failure by a principal to timely disclose to the government credible evidence of (1) violations of federal criminal laws involving fraud, conflict of interest, bribery, or gratuity offenses covered by Title 18 of the United States Code; (2) violations of the civil False Claims Act; or (3) significant overpayments on the contract that occurred in connection with the award, performance or closeout of a federal contract or subcontract and were discovered within three years of final payment; and other offenses indicating a lack of business integrity or honesty that seriously affect the present responsibility of a contractor. Agency officials may also suspend a contractor when they suspect, upon adequate evidence, that there exists "any other cause of so serious or compelling a nature that it affects the present responsibility of a ... contractor or subcontractor." A suspension generally lasts only as long as an agency's investigation of the conduct for which the contractor was suspended, or any ensuing legal proceedings. It generally may not exceed 12-18 months unless legal proceedings have been initiated within that period. As discussed below, certain due process protections apply with suspensions, as with debarment. Suspension-worthy conduct can be imputed, as can debarment-worthy conduct. The FAR expressly authorizes agencies to extend debarment or suspension decisions to "affiliates" of the contractor if the affiliates are specifically named, and are given written notice of the exclusion and an opportunity to respond. The FAR also provides that the "fraudulent, criminal, or other seriously improper conduct" of an officer, director, shareholder, partner, employee, or other individual associated with a contractor may be imputed to the contractor in certain circumstances, and vice versa. In addition, the conduct of one contractor participating in a joint venture or similar arrangement may be imputed to other contractors if "the conduct occurred for or on behalf of the joint venture or similar arrangement, or with the knowledge, approval, or acquiescence of these contractors." However, while these regulations have been described by one court as "administrative devices to protect the public welfare and to impose on government contractors a higher standard of care," they do not necessarily allow agencies to exclude persons simply based on their job titles or other nominal indicia of control. Similarly, agency exclusion determinations could potentially be vulnerable to challenge on the grounds that they are unreasonable if the agency makes "inconsistent" decisions when determining whether to exclude particular affiliates of a contractor. Not all contractors who engage in conduct that constitutes potential grounds for debarment or suspension under the FAR are excluded from contracting with executive branch agencies. Nor does the debarment or suspension of a contractor guarantee that agencies do not presently have contracts with that contractor, or will not contract with that contractor before the exclusion period ends. Several aspects of the exclusion process under the FAR explain why this is so. First, under the FAR, debarment or suspension of contractors is discretionary. The FAR says that agencies "may debar" or "may suspend" a contractor when grounds for exclusion exist, but it does not require them to do so. Rather, the FAR advises agency officials to focus upon the public interest when making debarment determinations. Because the public interest can be seen to encompass both safeguarding public funds by excluding contractors who may be nonresponsible and not excluding contractors who are fundamentally responsible and could otherwise compete for government contracts, agency officials could find that contractors who engaged in exclusion-worthy conduct should not be excluded, particularly if they appear unlikely to engage in similar conduct in the future. Any circumstance suggesting that a contractor is unlikely to repeat past misconduct--such as changes in personnel or procedures, restitution, or cooperation in a government investigation--can potentially incline an agency's decision against debarment. Moreover, exclusion can be limited to particular "divisions, organizational elements, or commodities" of a company if agency officials find that only segments of a business engaged in wrongdoing. Other contractors generally cannot challenge agency decisions not to debar a contractor who is alleged or could be said to have engaged in debarment-worthy conduct. They generally can only contest an agency's determination of a contractor's present responsibility, which is required prior to a contract award. Second, agencies can use administrative agreements as alternatives to debarment. In these agreements, the contractor generally admits its wrongful conduct and agrees to restitution; separation of employees from management or programs; implementation or extension of compliance programs; employee training; outside auditing; agency access to contractor records; or other remedial measures. The agency, for its part, reserves the right to impose additional sanctions, including debarment, if the contractor fails to abide by the agreement or engages in further misconduct. The FAR notes such agreements as a possible alternative to debarment, and their formation has historically been seen to be within agencies' general authority to determine with whom and on what terms they contract. Only the agency signing the agreement is a party to it, and other agencies would not necessarily have been aware of the agreement's existence prior to enactment of the Duncan Hunter National Defense Authorization Act for FY2009. Commonly known as the Clean Contracting Act, Sections 871-873 of this act required the General Services Administration to establish a database that includes information related to contractor misconduct beyond that contained in the former Excluded Party List System (EPLS), subsequently incorporated within the System for Award Management (SAM). Called the Federal Awardee Performance Integrity Information System (FAPIIS), the database established by the Clean Contracting Act is required to contain brief descriptions of administrative agreements relating to federal contracts within the past five years (along with terminations for default and nonresponsibility determinations and civil, criminal, and administrative proceedings involving federal contracts that resulted in a conviction or finding of fault) for persons holding a federal contract or grant worth $500,000 or more. Third, even when a contractor is debarred, suspended, or proposed for debarment under the FAR, an agency may generally allow the contractor to continue performance under any current contracts or subcontracts unless the agency head directs otherwise. The debarment or suspension generally serves only to preclude an excluded contractor from (1) receiving new contracts or orders from executive branch agencies; (2) receiving new work or an option under an existing contract; (3) serving as a subcontractor on certain contracts with executive branch agencies; or (4) serving as an individual surety for the duration of the debarment or suspension. Any contracts that the excluded contractor presently has remain in effect unless they are terminated for default or for convenience under separate provisions of the FAR. Finally, the FAR authorizes agencies to waive a contractor's exclusion and enter into new contracts with a debarred or suspended contractor. For an exclusion to be waived, an agency head must "determine[] that there is a compelling reason for such action." Some agencies have regulations defining what constitutes a "compelling reason," while others do not. Waivers are agency-specific and are not regularly communicated to other agencies, a situation which a 2005 Government Accountability Office (GAO) report suggested remedying. Agency determinations about the existence of compelling reasons are not, per se , reviewable by the courts; however, other contractors can challenge awards to formerly excluded contractors through customary bid protest processes. Moreover, even when an agency does not waive a contractor's exclusion, it can reduce the period or extent of debarment if the contractor shows (1) newly discovered material evidence; (2) reversal of the conviction or civil judgment on which the debarment was based; (3) bona fide changes in ownership or management; (4) elimination of other causes for which the debarment was imposed; or (5) other appropriate reasons. Although agencies generally have broad discretion in determining whether contractors should be excluded for particular conduct, contractors enjoy several protections in the exclusion process. Perhaps the foremost among these is an entitlement to due process of the law under the Fifth Amendment to the U.S. Constitution. Early government contractors were generally held to lack due process protections because contracting with the government was viewed as a privilege, not a right, and courts held that persons were entitled to due process only when deprived of rights. However, this changed in 1964, with the decision by the U.S. Court of Appeals for the D.C. Circuit in Gonzalez v. Freeman . Written by future Chief Justice Warren Burger, who was then a judge for the D.C. Circuit, Gonzalez held that while contractors may not have a right to government contracts, "that cannot mean that the government can act arbitrarily, either substantively or procedurally, against a person or that such a person is not entitled to challenge the processes and the evidence before he is officially declared ineligible for government contracts ." For this reason, the court found that the Commodity Credit Corporation (CCC) had improperly debarred the Thos. P. Gonzalez Corporation, in part, because the CCC failed to provide written notice of the charges against the contractor and did not give the contractor "the opportunity to present evidence and to cross-examine adverse witnesses, all culminating in administrative findings and conclusions based upon the record." A subsequent decision by the D.C. Circuit in Horne Brothers, Inc. v. Laird held that contractors are also entitled to due process in suspension determinations, although the court distinguished between suspensions of shorter and longer duration in finding that a contractor is entitled to pre-exclusion notice and an opportunity to be heard in suspensions of five months but not of three weeks. Because of these and subsequent decisions, the FAR currently provides that contractors must generally receive notice and an opportunity for a hearing before being debarred, but can be suspended without prior notice or an opportunity to be heard so long as they are "immediately advised" of the suspension and allowed to offer information in opposition to the suspension within 30 days. The judicially developed doctrine of de facto debarment can also serve to protect contractors from improper exclusion in certain circumstances. While the possibility of de facto debarment often arises in connection with agency conduct that also deprives the contractor of a protected liberty interest without due process, the de facto debarment analysis focuses primarily upon conduct outside the debarment and suspension process that effectively excludes contractors. For example, in its 1980 decision in Old Dominion Dairy Products, Inc. v. Secretary of Defense , the U.S. Court of Appeals for the D.C. Circuit found that the Air Force had improperly de facto debarred a contractor through repeated nonresponsibility determinations based on the same information. The Air Force had determined the contractor to be nonresponsible for the award of one contract because of an audit report showing three irregularities in billing statements. The Air Force never informed the contractor of these allegations, in part, because contractors do not routinely receive notice of nonresponsibility determinations concerning them. However, the contractor was later determined to be nonresponsible for the award of a second contract by another contracting officer, who had received news of the earlier determination and relied upon it to conclude that the contractor lacked integrity. The court found that the second nonresponsibility determination constituted an improper de facto debarment because the contractor was excluded from government contracts without any notice of or opportunity to challenge the allegations against it. Later judicial and administrative tribunals have similarly found that an agency improperly de facto debars a contractor based upon repeated nonresponsibility determinations based on the same information, as well as through words or conduct evidencing an intent to exclude the contractor from government contracts. Additionally, in certain circumstances, agencies' determinations to debar or suspend a contractor could potentially be found to violate the Administrative Procedure Act (APA), particularly if the agency excludes the contractor based upon circumstances that the agency was aware of when it previously found that contractor sufficiently responsible to be awarded a federal contract. Such a situation arose in the 2001 case of Lion Raisins, Inc. v. United States , where the U.S. Court of Federal Claims found that the U.S. Department of Agriculture's (USDA's) suspension of a contractor for falsifying raisin certifications violated the APA, given that the USDA knew of the contractor's conduct when making five prior determinations that the contractor was "responsible." According to the court, [e]ven assuming plaintiff's alleged conduct evidences "a lack of integrity or business honesty" so as to justify suspension, the court holds that [the suspending official] abused his discretion when he determined that the evidence of plaintiff's lack of integrity in April 1998, which was known to the agency as of May 1999, "seriously and directly" affected plaintiff's "present responsibility" as a Government contractor in February of 2001. The USDA awarded plaintiff five contracts between the completion of its investigation in May 1999 and its decision to suspend plaintiff in January 2001. The USDA statutorily was obligated to make an affirmative finding of plaintiff's responsibility before awarding each of those contracts. In other words, five times between May 26, 1999, and February 1, 2001, the USDA itself affirmed that plaintiff's business practices met the standards for present responsibility. Significantly, by the USDA's own representations, it did so despite the possession of all the evidence that it would later use to suspend plaintiff. The court finds these facts dispositive of the issue of plaintiff's present responsibility. That [the suspending official] knew of the five interim contracts is demonstrated by their incorporation into the administrative record and by his reference to them in his final report and decision. That he nevertheless concluded that suspension was immediately necessary to protect government interests, without pointing to any event as to the issue of immediacy, was arbitrary and capricious. While the decision in Lion Raisins has been strongly criticized by some commentators and distinguished by some courts, it has been followed or cited approvingly by others and could potentially be construed as precluding agencies from debarring or suspending contractors under the FAR based on "stale" allegations of wrongdoing.

Debarment and suspension (collectively known as "exclusion") are of perennial interest to Congress because exclusion is one of the primary techniques that federal agencies use to avoid dealings with vendors who have failed, or are deemed likely to fail, to meet their obligations under federal law or government contracts. Debarred contractors are generally ineligible for new federal contracts for a fixed period of time, while suspended contractors are generally ineligible for the duration of any investigation or litigation involving their conduct. Federal law specifies various grounds for exclusion, only some of which expressly relate to procurement. The grounds and procedures for nonprocurement exclusions are outside the scope of this report. However, all persons excluded on procurement or other grounds are listed in the System for Award Management (SAM), which contracting officers must check prior to awarding a contract. Procurement-related exclusions can be broadly characterized as being either statutory or administrative. Statutory exclusions are required or authorized by congressional enactments that bar persons who have engaged in conduct prohibited under the statute from at least certain government contracts. Such exclusions are often mandatory, or at least beyond the discretion of the heads of procuring agencies, and are intended as punishments. The statute often prescribes the duration of the exclusion, and procuring agencies generally cannot waive the exclusion. Administrative exclusions, in contrast, are authorized by the Federal Acquisition Regulation (FAR). The FAR authorizes the debarment of contractors who are convicted of, found civilly liable for, or found by agency officials to have committed specified offenses, or when other causes affect contractor responsibility. It similarly authorizes suspension when contractors are suspected of or indicted for specified offenses, or when there are other causes that affect contractor responsibility. The FAR does not require the exclusion of a contractor, even when grounds for exclusion are present. Instead, agency officials retain discretion as to whether to exclude particular contractors, and they may enter into administrative agreements circumscribing the conduct of contractors in lieu of exclusion. Exclusion under the FAR is also intended to protect the government's interests, not for purposes of punishment. The length of the exclusion can vary depending upon the seriousness of the conduct in question and the duration of any investigation, among other things. However, agency heads could waive administrative exclusions. Excluded parties are generally ineligible for new government contracts and, in the case of administrative exclusions, are also expressly said to be ineligible to (1) receive new work or an option under an existing contract; (2) serve as a subcontractor on certain contracts; or (3) serve as an individual surety. However, existing contracts of the excluded contractor generally remain in effect unless they are terminated for default or convenience by the government. Because they are dealing with the federal government, contractors are entitled to due process before being excluded from government contracts, although the nature of the process due to them varies for debarments and suspensions. Agencies are generally prohibited from using means other than debarment or suspension proceedings to effectively exclude contractors. Such conduct is sometimes described as "de facto debarment." Conduct that results in de facto debarment could also result in contractors being deprived of constitutionally protected liberty interests in prospective government contracts. Additionally, agencies could be found to have violated the Administrative Procedure Act (APA) by acting arbitrarily and capriciously if they exclude a contractor based upon circumstances that the agency was aware of when it previously found the contractor sufficiently "responsible" to be awarded a federal contract.

A "Dear Colleague" letter is official correspondence that is sent by a Member, committee, or officer of the House of Representatives or Senate and that is widely distributed to other congressional offices. A "Dear Colleague" letter may be circulated in paper through internal mail, distributed on a chamber floor, or sent electronically. "Dear Colleague" letters are often used to encourage others to cosponsor, support, or oppose a bill. "Dear Colleague" letters concerning a bill or resolution generally include a description of the legislation or other subject matter along with a reason or reasons for support or opposition. Additionally, "Dear Colleague" letters are used to inform Members and their offices about events connected to congressional business or modifications to House or Senate operations. The Committee on House Administration and the Senate Committee on Rules and Administration, for example, routinely circulate "Dear Colleague" letters to Members concerning matters that affect House or Senate operations, such as House changes to computer password policies or a reminder about Senate restrictions on mass mailings prior to elections. These letters frequently begin with the salutation "Dear Colleague." The length of such correspondence varies, with a typical "Dear Colleague" running one to two pages. Member-to-Member correspondence has long been used in Congress. For example, since early House rules required measures to be introduced only in a manner involving the "explicit approval of the full chamber," Representatives needed permission from other Members to introduce legislation. A common communication medium for soliciting support for this action was a letter to colleagues. For example, Representative Abraham Lincoln, in 1849, formally notified his colleagues in writing that he intended to seek their authorization to introduce a bill to abolish slavery in the District of Columbia. The use of the phrase "Dear Colleague" has been used to refer to a widely distributed letter among Members at least since early in the 20 th century. In 1913, the New York Times included the text of a "Dear Colleague" letter written by Representative Finley H. Gray to Representative Robert N. Page in which Gray outlined his "conceptions of a fit and proper manner" in which Members of the House should "show their respect for the President" and "express their well wishes" to the first family. In 1916, the Washington Post included the text of a "Dear Colleague" letter written by Representative William P. Borland and distributed to colleagues on the House floor. The letter provided an explanation of an amendment he had offered to a House bill. Congress has since expanded its use of the Internet and electronic devices to facilitate distribution of legislative documents. Electronic "Dear Colleague" letters can be disseminated via internal networks in the House and Senate, supplementing or supplanting paper forms of the letters. Such electronic communication has increased the speed and facilitated the process of distributing "Dear Colleague" letters. In the contemporary Congress, Members use both printed copy distribution and electronic delivery for sending "Dear Colleague" letters. In the House, Members may choose to send "Dear Colleague" letters through internal mail, through the electronic e -"Dear Colleague" system, or both. Regardless of distribution method, House "Dear Colleague" letters are required to address official business and must be signed by a Member or officer of Congress. Members of the House often send out "Dear Colleague" letters to recruit cosponsors for their measures. The practice of recruiting cosponsors has become more important since the passage of H.Res. 42 in the 90 th Congress (1967-1968). H.Res. 42 amended House rules to permit bill cosponsors, but limited the number to 25. In 1978, the House agreed to H.Res. 86 , which further amended House rules to permit unlimited numbers of cosponsors. "Dear Colleague" letters sent through internal mail must be written on official letterhead, address official business, and be signed by a Member or officer of Congress. A cover letter must accompany the "Dear Colleague" letter, addressed to the director of the House customer solution center, with specific distribution instructions and authorization as to the number to be distributed. These materials must be submitted by 9:45 a.m. for morning distribution and 1:45 p.m. for afternoon mail delivery. The current number of paper copies needed for distribution of a "Dear Colleague" letter in the House is 475 for all Members only (including leadership); 525 for all Members (including leadership and full committees); 625 for Members, full committees, and subcommittees; 300 for Republican Members, leadership, and full Republican committees; 275 for all Republican Members and leadership only; 250 for Democratic Members, leadership, and full Democratic committees; 200 for all Democratic Members and leadership only; and 700 for all House mail stops. For distribution to the Senate, House "Dear Colleague" letters must have a separate cover letter addressed to the deputy chief administrative officer of the House for customer solutions, adhere to the same standards as House "Dear Colleague" letters, and follow the current distribution numbers of 110 for Senators only, and 135 for Senators and committees. When using the paper system, congressional offices create and photocopy their "Dear Colleague" letters and deliver them to either the First Call Customer Service Center or to the House Postal Operations Office. When the House Postal Operations Office is closed, letters may be deposited in a drop box located in the vending area of the Longworth cafeteria. A copy of the "Dear Colleague" letter is delivered to offices as requested. On August 12, 2008, the House introduced a web-based e -"Dear Colleague" distribution system. The e -"Dear Colleague" system replaced the email-based system. Under the e -"Dear Colleague" system, then-chair of the Committee on House Administration, Representative Robert Brady, wrote that Members and staff "will be able to compose e -Dear Colleagues online, and associate them with up to three issue areas. Members and staff will be able to independently manage their subscription to various issue areas and receive e -Dear Colleagues according to individual interest." Pursuant to the House Members' Congressional Handbook , the rules regulating a paper "Dear Colleague" letter sent via internal mail are also applicable to a letter sent electronically. House Members and staff who want to use the e -Dear Colleague system can subscribe and send letters at http://e-dearcolleague.house.gov . During the registration process, they may choose up to 32 issue areas for which they wish to receive "Dear Colleague" letters. The website also allows them to sign up for either the Republican or Democratic "Dear Colleague" distribution lists. Additionally, the website enables individuals "to search all e -Dear Colleagues by session, date, issue area, and keyword or bill number." The e -Dear Colleague system did not alter the process for the delivery of paper "Dear Colleague" letters. To send an e-"D ear Colleague" letter, an individual staff member views http://e-dearcolleague.house.gov and clicks on send. This action brings up the send screen, where the staff member takes the following actions: enters his or her email address, the type of office the staff member works in (i.e., Member, leadership, committee, or other), and the Member's, committee's, or office's name; types in a letter title, selects whether it is a letter to be sent to either the Republican or Democratic distribution lists, and chooses up to three issues to associate with the letter; types, or cuts and pastes, the letter into the text editor on the webpage, including uploading any graphics or attachments; associates the letter with a particular bill or resolution number (optional); and reviews the letter before sending. Following the completion of this process, staff members receive an email asking them to confirm that they are sending the "Dear Colleague" letter. A final opportunity to edit the letter is also provided. Once the letter is completed, it is sent to all individuals who have selected to receive "Dear Colleague" letters in issue areas associated with the letter. Electronic versions of "Dear Colleague" letters sent prior to August 12, 2008, are stored in a Microsoft Exchange public folder that is accessible to all House Members and staff. Electronic versions of "Dear Colleague" letters sent on or after August 12, 2008, are archived on the House e -"Dear Colleague" website. Similar to the House paper system, "Dear Colleague" letters in the Senate are written on official letterhead and address official business, but there is not a central distribution policy. In general, when using the paper system, Senators and chamber officers create their own "Dear Colleague" letters and have them reproduced at the Senate Printing Graphics and Direct Mail Division. Once reproduced, paper copies of the "Dear Colleague" letters are delivered to the Senate Mailroom by the sending office, accompanied by a distribution form or cover letter with specific distribution instructions. As prescribed by the Senate, current distribution numbers for "Dear Colleague" letters in the Senate are 100 for all Senators; 20 for standing, select, and special committees; 5 for the joint leadership; and 1 each for the officers of the Senate (total of 7). The choice to send "Dear Colleague" letters electronically is at the discretion of the individual Senate office. There is no central distribution system for electronic Senate "Dear Colleague" letters.

"Dear Colleague" letters are correspondence signed by Members of Congress and distributed to their colleagues. Such correspondence is often used by one or more Members to persuade others to cosponsor, support, or oppose a bill. "Dear Colleague" letters also inform Members about new or modified congressional operations or about events connected to congressional business. A Member or group of Members might send a "Dear Colleague" letter to all of their colleagues in a chamber, to Members of the other chamber, or to a subset of Members, such as all Democrats or Republicans. The use of the phrase "Dear Colleague" to refer to a widely distributed letter among Members dates at least to the start of the 20th century, and refers to the generic salutation of these letters. New technologies and expanded use of the Internet have increased the speed and facilitated the process of distributing "Dear Colleague" letters.

The Environmental Protection Agency (EPA) was established in 1970 to consolidate federal pollution control responsibilities that had been divided among several federal agencies. EPA's responsibilities grew significantly as Congress enacted an increasing number of environmental laws as well as major amendments to these statutes. Among the agency's primary responsibilities are the regulation of air quality, water quality, pesticides, and toxic substances; the management and disposal of solid and hazardous wastes; and the cleanup of environmental contamination. EPA also awards grants to assist states and local governments in complying with federal requirements to control pollution, to assist those states with the delegated authority to administer certain federal pollution control programs, and for research and other activities supporting the agency's mission. Since FY2006, Congress has funded EPA programs and activities within the Interior, Environment, and Related Agencies appropriations bill. No regular appropriations bill was enacted before October 1, 2011, the start of FY2012, for the Interior, Environment, and Related Agencies or the other 11 regular appropriations bills. Prior to the enactment of the Consolidated Appropriations Act, 2012 ( P.L. 112-74 , H.R. 2055 ), on December 23, 2011, EPA and other departments and agencies funded within the Interior, Environment, and Related Agencies Appropriations bill were operating under a series of continuing resolutions sequentially extending FY2012 funding. From July 25, 2011, to July 28, 2011, the House considered H.R. 2584 as reported July 19, 2011, by the House Appropriations Committee, recommending FY2012 appropriations for Interior, Environment, and Related Agencies, but the House floor debate was suspended. No bill to fund Interior, Environment, and Related Agencies for FY2012 was formally introduced in the Senate. However, on October 14, 2011, the bipartisan leadership of the Senate Appropriations Subcommittee on Interior, Environment, and Related Agencies released a draft bill for FY2012 to serve as a starting point of discussions for markup. Title II under Division E of P.L. 112-74 ( H.Rept. 112-331 ) provided $8.46 billion for EPA for FY2012, not including a 0.16% across-the-board rescission. The total FY2012 appropriations for EPA was an 18.3% increase above the $7.15 billion proposed for FY2012 for EPA by the House Appropriations Committee in H.R. 2584 ( H.Rept. 112-151 ) as reported, but 1.8% less than the $8.62 billion proposed in the October 14, 2011, Senate subcommittee draft. The enacted EPA FY2012 appropriation was $219.1 million (2.6%) less than the FY2011 enacted appropriations of $8.68 billion, and $510.0 million (5.7%) below the $8.97 billion included in the President's FY2012 budget request. In addition to funding priorities among the various EPA programs and activities, several recent and pending EPA regulatory actions were central to the debate on the FY2012 appropriations. These EPA regulatory actions, which were also the focus of considerable attention during deliberations on EPA's FY2011 appropriations, cut across the various environmental pollution control statutes' programs and initiatives. Some Members expressed concerns related to these actions during hearings and markup of EPA's FY2012 appropriations, and authorizing committees have been addressing EPA regulatory actions through hearings and legislation. P.L. 112-74 included several administrative and general provisions affecting EPA actions and authorities (see " Selected Provisions Regarding EPA Actions " later in this report), but not nearly as many as the more than 25 provisions proposed in the Interior, Environment, and Related Agencies Appropriations bill, H.R. 2584 ( H.Rept. 112-151 ) as reported by the House Appropriations Committee. Several additional proposals to address EPA actions were also among the roughly 150 amendments considered and pending prior to suspension of House floor debate of H.R. 2584 on July 28, 2011. The Senate subcommittee draft did not include general provisions similar to the House committee-reported bill that would restrict or preclude EPA from using appropriated funds for implementing or proceeding with a number of regulatory actions. In response to congressional interest in several of the provisions affecting EPA program activities included in P.L. 112-74 and proposed in H.R. 2584 as reported by the House Appropriations Committee, this report highlights a number of these provisions. The information regarding the provisions presented throughout this report is primarily an extraction of language contained in P.L. 112-74 and proposed in H.R. 2584 for purposes of reference, and is not intended to provide a comprehensive analysis of all provisions related directly or indirectly to EPA programs. As all the terms and activities contained within the provisions were not always explicitly defined, the scope of the effects of many of the provisions is subject to interpretation, and therefore neither definitions nor potential impacts are inferred in this report. Only those provisions affecting EPA programs that are clearly identifiable by specific language or references are included in this report. This report also provides a brief summary of funding levels for EPA accounts and certain program activities enacted and proposed for FY2012, and enacted for FY2011. The following section of this report provides an overview of enacted appropriations for FY2012 as compared to amounts proposed in H.R. 2584 as reported, the Senate subcommittee draft, the President's FY2012 request, and the enacted amounts for FY2011 in P.L. 112-10 . For purposes of historical comparison, Table A-1 in the Appendix of this report shows EPA enacted appropriations by account for FY2008 through FY2012. The overview of funding levels is followed by highlights of provisions included in P.L. 112-74 and a series of tables that present a comparison of a compilation of excerpts of selected provisions in P.L. 112-74 with those proposed in H.R. 2584 as reported. These provisions are for selected EPA programs and activities that received prominent attention during deliberations on the FY2012 appropriations. Amendments that were agreed to or failed during House floor debate of H.R. 2584 , as well as submitted amendments pending action, are not included in the tables, as the House floor debate of H.R. 2584 was suspended and not completed. Concerns regarding EPA's FY2012 funding generally focused on federal financial assistance for wastewater and drinking water infrastructure projects, grants to assist states in implementing air pollution control requirements, climate change research and related activities, and environmental cleanup of Superfund sites. There also was interest in funding for geographic-specific water quality initiatives, particularly the Great Lakes Restoration Initiative, and efforts to restore the Chesapeake Bay and Puget Sound. Since FY1996, EPA's funding has been requested by the Administration and appropriated by Congress under eight statutory accounts. Table 1 presents the FY2012 enacted amounts for EPA compared to the amounts proposed by the House Appropriations Committee in H.R. 2584 as reported, the Senate subcommittee draft released October 14, 2011, the President's FY2012 budget request, and the FY2011 enacted appropriations for the eight accounts that fund the agency. The table includes a brief description of the programs and activities funded within each of the EPA accounts. Note that the former name of the "Oil Spill Response" account was changed by the conferees as proposed in the President's FY2012 request to "Inland Oil Spill Program." This modification was intended to more clearly reflect the agency's jurisdiction for oil spill response in the inland coastal zone. The FY2012 enacted appropriations reflect a decrease from the FY2011 enacted levels and the President's FY2012 request for each of the eight EPA accounts once the 0.16% across-the-board rescission is applied. With the exception of increases for the Hazardous Substance Superfund, the Leaking Underground Storage Tank Trust Fund, and the Buildings and Facilities accounts, the FY2012 appropriations were below the levels for each of the remaining accounts as recommended in the Title II of the Senate subcommittee draft. Accounting for the across-the-board rescission, FY2012 enacted appropriations for all of the accounts were above the levels proposed in the House Appropriations Committee-reported bill ( H.R. 2584 ), with the largest difference (38.6%) being the State and Tribal Assistance Grants (STAG) account. The House Committee had proposed roughly a 55% reduction below FY2011 enacted appropriations (to the FY2008 level) for grants to aid states to capitalize their Clean Water State Revolving Funds (SRFs). The Drinking Water SRF would also have been reduced to the FY2008 level, although the magnitude of the decreases below the FY2011 enacted and FY2012 requested levels would have been smaller than the decreases for the Clean Water SRF. There was variability among the FY2012 enacted amounts for program activities below the account level, compared to the FY2012 proposals and the FY2011 enacted amounts. In those cases where FY2012 enacted amounts were the same as proposed for FY2012 and FY2011 enacted, the FY2012 enacted levels would be a decrease once the 0.16% across-the-board rescission is taken into account. The tables contained in the conference report ( H.Rept. 112-331 ) provide a comparison of the FY2012 appropriations for certain individual programs and activities funded within each of the eight appropriations accounts with the FY2012 President's request and FY2011 levels. However, a comparison with FY2011 enacted is not possible across all program activities. The conferees accepted the reorganization of the budget presentation of certain program areas below the appropriations account level for FY2012 as proposed by the President, including consolidation and modifications of line items, making the FY2011 enacted funding levels not comparable to the reorganized activities. The table included in H.Rept. 112-151 (pp. 192-200) accompanying H.R. 2584 and those accompanying the Senate subcommittee draft reflect the reorganization, allowing for comparisons at the sub-account level. The $23.0 million transfer from the Hazardous Substance Superfund account to the Science and Technology (S&T) account included in P.L. 112-74 for FY2012 was the same as proposed for FY2012 in both the House and Senate versions and as requested, but is $3.8 million less than the $26.8 million transferred in FY2011. The FY2012 transfer of $10.0 million from the Superfund account to the Environmental Programs and Management (EPM) account was the same as proposed for FY2012 and enacted for FY2011. These transfer comparisons would reflect a decrease once the 0.16% across-the-board rescission is included for the FY2012 enacted amounts. In addition to the funding amounts presented by account in the table below, the "Administrative Provisions" for EPA in Title II of Division E under P.L. 112-74 , included a rescission of $50.0 million from unobligated balances funded through the Hazardous Substance Superfund ($5.0 million) and STAG ($45.0 million) accounts. Within the STAG account, the distribution of the rescission was specified in the provision as $20.0 million from categorical grants, $10.0 million from the Clean Water SRF, and $5.0 million each from Brownfields grants, Diesel Emission Reduction Act grants, and Mexico Border grants. H.R. 2584 as reported had proposed a rescission of $140.0 million, and the Senate subcommittee draft proposed a smaller rescission of $34.0 million from unobligated balances funded through the Superfund and STAG accounts, but the distribution of the rescissions was not specified. The FY2012 request proposed a $50.0 million rescission of prior years' unobligated balances, but did not specify from which account. Similar rescissions of unobligated balances have been included in EPA appropriations since FY2006. For FY2011, Section 1740 in Title VII of Division B in P.L. 112-10 included a rescission of $140.0 million from unobligated balances available within the STAG account only; for FY2010, P.L. 111-88 included a $40.0 million rescission of unobligated balances available from the STAG and the Hazardous Substance Superfund accounts. An additional EPA administrative provision in the FY2012 enacted appropriations authorized the Administrator to transfer up to $300.0 million of the funds appropriated for the Great Lakes Restoration Initiative (GLRI) within the EPM account to other federal departments or agencies to carry out projects supporting the GLRI and the Great Lakes Water Agreement programs, projects, or activities. Not including the 0.16% across-the-board rescission, the FY2012 enacted amount was generally the same as FY2011 enacted and the proposed amount for FY2012 in the Senate draft, more than the $250.0 million proposed in the House committee-reported H.R. 2584 , but less than the $350.0 million included in the FY2012 request. During the past two years, EPA has proposed and promulgated numerous regulations implementing provisions of many of the federal pollution control statutes enacted by Congress. During the first session of the 112 th Congress, many stakeholders and some Members expressed concerns that the agency was reaching beyond the authority given it by Congress and ignoring or underestimating the costs and economic impacts of proposed and promulgated rules. EPA and others countered that these actions were consistent with statutory mandates and in some cases compelled by court ruling, the pace in many ways is slower than a decade ago, and that cost and benefits are appropriately evaluated. Recently promulgated and pending actions under the Clean Air Act, in particular EPA controls on emissions of greenhouse gases and efforts to address conventional pollutants (e.g., mercury, particulate matter, sulfur dioxide) from a number of industries, received much of the attention. Several actions under the Clean Water Act, Safe Drinking Water Act, Resource Conservation and Recovery Act (RCRA), Federal Insecticide, Fungicide, and Rodenticide Act (FIFRA), and the Toxics Substances Control Act (TSCA), also received some attention. A number of these issues were the focus of considerable debate which resulted in provisions in the enacted and House Appropriations Committee-proposed versions of the FY2012 Interior, Environment, and Related Agencies Appropriations bill. P.L. 112-74 included several administrative and general provisions affecting EPA actions and authorities (see tables that follow), but not nearly as many as those proposed in the Interior, Environment, and Related Agencies Appropriations bill, H.R. 2584 ( H.Rept. 112-151 ) as reported by the House Appropriations Committee on July 19, 2011, and among amendments considered and submitted prior to suspension of the House floor debate on July 28, 2011. Most of the administrative provisions in the FY2012 enacted appropriations were similar to those proposed in H.R. 2584 as reported and the Senate draft for FY2012, and the general provisions were similar to or a slightly revised subset of those contained in House committee-reported bill. Comparable general provisions were not proposed in the Senate draft. In addition to the rescission of unobligated balances and transfer of funds for the Great Lakes Restoration Initiative discussed in the previous section (" Comparison of EPA FY2012 Enacted and Proposed Appropriations ") and presented in Table 1 above, three other provisions were included in the EPA Administrative Provisions setting terms and conditions for the use of FY2012 appropriations, under Title II of Division E in P.L. 112-74 . These administrative provisions were similar to those included in both House committee-reported H.R. 2584 and the Senate subcommittee draft. One additional provision authorized EPA to transfer up to $10.0 million from any of its eight accounts to fund emergency response actions for oil spills in addition to amounts available in the Inland Oil Spill Program account if the Administrator determines that the account will be exhausted within 30 days. The funds transferred from other accounts would be reimbursed by payments administered by the U.S. Coast Guard from the Oil Spill Liability Trust Fund. This provision was similar to an administrative provision included in the Senate draft that allowed for the transfer of funds under these circumstances, but without placing a dollar limit on the amount of the transfer. H.R. 2584 as reported did not include such a transfer provision. Division E, Title IV "General Provisions" in P.L. 112-74 , included provisions specifying requirements and restrictions for the use of appropriations for certain air quality regulatory actions and greenhouse gas emission reporting requirements, and certain Clean Water Act permitting requirements associated with silvicultural activities: Section 425 of Division E of the FY2012 appropriations law required the President to submit a comprehensive report to the House and Senate Appropriations Committees detailing all federal (including EPA) obligations and expenditures, domestic and international, for climate change programs and activities by agency for FY2011. Section 426 prohibited the use of appropriations for promulgation or implementation of regulation requiring permits under Title V of the Clean Air Act for certain pollutants resulting from biological processes associated with livestock production, and Section 427 prohibited use of appropriations for implementing any provisions in a rule that requires mandatory reporting of greenhouse gas emissions from "manure management systems." Section 432 of the FY2012 law amended Section 328 of the Clean Air Act, effectively transferring authority to regulate air emissions from EPA to Department of the Interior (DOI) in the Outer Continental Shelf off Alaska's north coast. Section 429 in P.L. 112-74 prohibited EPA from requiring a permit under Section 402 of the Federal Water Pollution Control Act (33 U.S.C. 1342; commonly referred to as the Clean Water Act), and further, prohibited the EPA administrator "...from directly or indirectly requiring any state to require a permit for discharges of stormwater runoff from roads, the construction of, use, or maintenance of which is associated with silvicultural activities, or from other silvicultural activities involving nursery operations, site preparation, reforestation and subsequent cultural treatment, thinning, prescribed burning, pest and fire control, harvesting operations, or surface drainage." Each of the general provisions included in the FY2012 appropriations summarized above is similar to provisions proposed for FY2012 in the House Appropriations Committee-reported bill H.R. 2584 as noted in the tables which follow. Section 425 in the enacted FY2012 appropriations was also similar to a reporting requirement for FY2009 and FY2010 contained in Section 426 of the Department of the Interior, Environment, and Related Agencies Appropriations Act, 2010 ( P.L. 111-88 ). A similar recurring reporting requirement had been in existence for nearly a decade through FY2007, under provisions in the annual appropriations bills for Foreign Operations. Section 426 and Section 427 of P.L. 112-74 are the same as Section 424 and Section 425 of P.L. 111-88 for FY2010, and retained in the FY2011 Full-Year Continuing Appropriations law ( P.L. 112-10 ). Additionally, in lieu of certain provisions proposed for FY2012 in the House Appropriations Committee-reported bill ( H.R. 2584 ), the FY2012 appropriations conference report, H.Rept. 112-331 , included extensive language with regard to specific actions by EPA. For example, under the Science and Technology account in H.Rept. 112-331 (p. 1,072), the conferees required specific refinements and modifications to EPA's policies and practices for conducting assessments under the agency's Integrated Risk Information System (IRIS). This report language reflects some of the concerns that resulted in a general provision, Section 444, contained in the House committee-reported bill. As reported, H.R. 2584 contained more than 25 provisions that would have restricted or precluded the use of FY2012 funds by EPA for implementing or proceeding with a number of regulatory actions. These provisions included more than 20 provisions proposed by the subcommittee, and eight amendments added during full committee markup. The more controversial provisions regarding several EPA programs and regulations were contained in the "General Provisions" in Title IV of H.R. 2584 . Further, Title V of the House Appropriations Committee-reported bill H.R. 2584 , the Reducing Regulatory Burdens Act of 2011, included amendments to the Clean Water Act and the Federal Insecticide, Fungicide, and Rodenticide Act (FIFRA) in response to EPA's consideration of requiring permits under the Clean Water Act for point source discharges of pesticides in or near U.S. waters. From July 25, 2011, to July 28, 2011, the House considered H.R. 2584 but did not complete debate on the bill. Concerns regarding these EPA actions continued to be raised during House floor debate and were among roughly 150 amendments considered and submitted prior to suspension of floor debate on July 28, 2011. The provisions and amendments central to the House debate would have impacted ongoing and anticipated EPA activities, including those addressing greenhouse gas emissions, hazardous air pollutants, particulate matter emissions, permitting of new source air emissions, water quality impacts of mountaintop mining operations, management of coal ash, lead-based paint removal, environmental impacts associated with livestock operations, financial responsibility with respect to Superfund cleanup, and stormwater discharge. Table 2 through Table 8 , which follow, highlight directive provisions included in P.L. 112-74 and proposed in H.R. 2584 as reported, including those that would restrict or preclude EPA from using appropriations for implementing or proceeding with a number of regulatory actions. Comparable provisions were not proposed in the Senate subcommittee draft. The provisions presented in the following tables are categorized in this report by general program areas, that is, air quality and climate change, water quality, and waste management. Related provisions that are under the jurisdiction of agencies other than EPA, but may impact EPA, are listed separately in Table 8 . The tables contain information about the provisions, including the associated sections of the bill (or relevant conference report citation with regard to EPA's ISIS program). H.R. 1 , the FY2011 Full-Year Continuing resolution passed by the House February 19, 2011, included roughly 20 provisions that would have similarly restricted and prohibited the use of FY2011 funds to implement EPA regulatory activities. These provisions were not included in the final FY2011 appropriations law ( P.L. 112-10 ) enacted April 15, 2011. Those provisions contained in P.L. 112-74 and H.R. 2584 as reported that are similar or the same as provisions proposed in H.R. 1 as passed by the House February 19, 2011, are denoted in the first column of each of the following tables. Since FY1996, EPA's appropriations have been requested by the Administration and appropriated by Congress within eight statutory appropriations accounts. Table A-1 identifies the amounts for the appropriations enacted by Congress for FY2008 through FY2012 for these accounts. The table identifies transfers of funds between these accounts, and funding levels for several grant program areas within the State and Tribal Assistance Grants (STAG) account that have received more prominent attention during these fiscal years. The enacted amounts presented in Table A-1 are based on most recent information available from House, Senate, or conference committee reports accompanying the annual appropriations bills that fund EPA.

Enacted December 23, 2011, the Consolidated Appropriations Act, 2012 (P.L. 112-74, H.R. 2055), finalized appropriations for FY2012 for those agencies typically funded under nine of the 12 regular appropriations bills. Not including a 0.16% across-the-board rescission, Title II of Division E under P.L. 112-74 provided $8.46 billion for the Environmental Protection Agency (EPA) for FY2012. The total was an increase above the $7.15 billion proposed by the House Appropriations Committee (H.R. 2584 as reported), but less than the $8.62 billion proposed in a draft released by the bipartisan leadership of the Senate Appropriations Subcommittee and the $8.97 billion included in the President's FY2012 budget request. The EPA FY2012 appropriations were $219.1 million (2.6%) less than the FY2011 enacted appropriations of $8.68 billion. Prior to the enactment of P.L. 112-74, EPA and agencies included in the Interior, Environment, and Related Agencies appropriations bill had been funded sequentially under a series of FY2012 continuing resolutions. In addition to FY2012 appropriations for the various EPA programs and activities, P.L. 112-74 included directive provisions regarding certain EPA authorities and program activities, including some that restricted the use of appropriated funds for implementing or proceeding with several recent and pending EPA regulatory actions. Division E, Title IV "General Provisions" P.L. 112-74, included provisions specifying requirements and restrictions for the use of appropriations for certain air Clean Air Act regulatory actions and greenhouse gas emission reporting requirements (see sections 425, 426, 427 and 432), and certain Clean Water Act permitting requirements associated with silvicultural activities (section 429). Additionally, the Conference Report H.Rept. 112-331 included extensive language with regard to specific actions by EPA. For example, under the Science and Technology account in H.Rept. 112-331 (p. 1072), the Conferees required specific refinements and modifications to EPA's policies and practices for conducting assessments under the agency's Integrated Risk Information System (IRIS). EPA regulatory actions received considerable attention during House and Senate oversight committee hearings, appropriations committee hearings, and House floor debate on the FY2012 appropriations during the first session of the 112th Congress. Several of the provisions included in P.L. 112-74 were the same or similar to a subset of more than 25 provisions included in H.R. 2584, the Department of the Interior, Environment, and Related Agencies Appropriations Act, 2012 (H.Rept. 112-151), as reported on July 19, 2011, and additional proposed provisions regarding EPA among roughly 150 amendments considered or submitted during floor debate of H.R. 2584, which was suspended on July 28, 2011. These proposed directives cut across many of the various environmental pollution control statutes' programs and initiatives. An October 14, 2011, draft released by the bipartisan leadership of the Senate Appropriations Subcommittee on Interior, Environment, and Related Agencies did not include comparable general provisions that would restrict or preclude the use of appropriations for certain EPA actions. This report summarizes funding levels for EPA accounts and certain sub-account program activities as enacted in P.L. 112-74, and as proposed in H.R. 2584 as reported by the House Appropriations Committee, in the Senate subcommittee draft, and in the President's FY2012 request, compared to the FY2011 enacted appropriations. Selected provisions regarding EPA program activities extracted from P.L. 112-74, the conference report, and the House committee-reported bill are also presented. Only those provisions affecting EPA that are clearly identifiable by specific language or references contained in the bill are included. Amendments that were considered or pending during initial House floor debate at the end of July 2011 are not included.

The executive branch of the U.S. federal government has mandated for decades that developers of border crossing energy facilities must first obtain a Presidential Permit. Until recently, this administrative oversight was undertaken with little fanfare. However, controversy over the proposed Keystone XL oil pipeline--a project that would transport oil sands crude from Alberta, Canada, into the United States--has focused attention on federal permitting of energy infrastructure border crossings. Generally, the construction, operation, and maintenance of facilities that cross the U.S.-Mexico or U.S.-Canada border must be authorized by the federal government through the issuance of a Presidential Permit in accordance with requirements set forth in a series of executive orders. This report discusses these executive orders, including the source of the executive branch authority to issue the orders, the standards set forth in the orders, and the projects approved pursuant to the orders. The report also discusses proposed changes to the Presidential Permitting framework in the Promoting Cross-Border Energy Infrastructure Act ( H.R. 2883 ), which passed in the House on July 19, 2017. The executive branch exercises permitting authority over the construction and operation of "pipelines, conveyor belts, and similar facilities for the exportation or importation of petroleum, petroleum products" and other products pursuant to a series of executive orders. This authority has been vested in the U.S. State Department since the promulgation of Executive Order 11423 in 1968. Executive Order 13337 amended this authority and the procedures associated with the review, but did not substantially alter the exercise of authority or its delegation to the Secretary of State. Executive Order 11423 provided that, except with respect to cross-border permits for electric energy facilities, natural gas facilities, and submarine facilities: The Secretary of State is hereby designated and empowered to receive all applications for permits for the construction, connection, operation, or maintenance, at the borders of the United States, of: (i) pipelines, conveyor belts, and similar facilities for the exportation or importation of petroleum, petroleum products, coal, minerals, or other products to or from a foreign country; (ii) facilities for the exportation or importation of water or sewage to or from a foreign country; (iii) monorails, aerial cable cars, aerial tramways and similar facilities for the transportation of persons or things, or both, to or from a foreign country; and (iv) bridges, to the extent that congressional authorization is not required. Executive Order 13337 designates and empowers the Secretary of State to "receive all applications for Presidential Permits, as referred to in Executive Order 11423, as amended, for the construction, connection, operation, or maintenance, at the borders of the United States, of facilities for the exportation or importation of petroleum, petroleum products, coal, or other fuels to or from a foreign country. " Executive Order 13337 further provides that after consideration of the application and comments received: If the Secretary of State finds that issuance of a permit to the applicant would serve the national interest, the Secretary shall prepare a permit, in such form and with such terms and conditions as the national interest may in the Secretary's judgment require, and shall notify the officials required to be consulted ... that a permit be issued. Thus the Secretary of State is directed by the order to authorize those border crossing facilities that the Secretary has determined would "serve the national interest," although the text of the Executive Order provides no further guidance on what is considered to "serve the national interest." Agency documents for a specific permit have discussed the "national interest" determination stating, for example, that "determination of national interest involves consideration of many factors, including: energy security; environmental, cultural, and economic impacts; foreign policy; and compliance with relevant federal regulations." One example of a national interest determination is the one made for Enbridge Energy's Alberta Clipper crude oil pipeline, which was issued a Presidential Permit by the State Department in August 2009. The 36-inch-diameter pipeline provides crude oil transportation from the oil sands region of Alberta, Canada, to oil markets in the Midwestern United States, crossing the international border in North Dakota. The State Department's national interest determination concluded that, for this particular project, the addition of crude oil pipeline capacity between Canada and the United States would advance a number of U.S. "strategic interests." These included increasing the diversity of available supplies among the United States' worldwide crude oil sources in a time of considerable political tension in other major oil producing countries and regions; shortening the transportation pathway for crude oil supplies; and increasing crude oil supplies from a major non-Organization of Petroleum Exporting Countries producer. Canada is a stable and reliable ally and trading partner of the United States, with which we have free trade agreements which augment the security of this energy supply.... Approval of the permit sends a positive economic signal, in a difficult economic period, about the future reliability and availability of a portion of United States' energy imports, and in the immediate term, this shovel-ready project will provide construction jobs for workers in the United States.... The State Department also considered the greenhouse gas emissions associated with the project, concluding that "the reduction of greenhouse gas emissions are best addressed through each country's robust domestic policies and a strong international agreement." The State Department has considerable discretion with respect to making national interest determinations, so its conclusions for one project may not apply to another due to differences in project configuration, energy market conditions, technology, environmental conditions, and other important factors. Thus, Presidential Permit applications even for projects that appear similar are evaluated on a case-by-case basis by the agency and may realize different permit outcomes. Executive Orders 11423 and 13337 explicitly exclude cross-border natural gas pipelines and electric energy facilities (among others) from their reach. Instead, permitting for these facilities is addressed in the Federal Power Act, the Natural Gas Act, and Executive Order 10485. Executive Order 10485 designates and empowers the now-defunct Federal Power Commission: (1) To receive all applications for permits for the construction, operation, maintenance, or connection, at the borders of the United States, of facilities for the transmission of electric energy between the United States and a foreign country. (2) To receive all applications for permits for the construction, operation, maintenance, or connection, at the borders of the United States, of facilities for the exportation or importation of natural gas to or from a foreign country. (3) Upon finding the issuance of the permit to be consistent with the public interest, and, after obtaining the favorable recommendations of the Secretary of State and the Secretary of Defense thereon, to issue to the applicant, as appropriate, a permit for such construction, operation, maintenance, or connection. The Secretary of Energy shall have the power to attach to the issuance of the permit and to the exercise of the rights granted thereunder such conditions as the public interest may in its judgment require. In many ways this authority resembles the authority granted to the State Department in Executive Orders 11423 and 13337. However, as mentioned above, those orders do not describe the source of the executive branch permitting authority granted by the orders. Judicial opinions have found that this permitting authority is a legitimate exercise of the President's "inherent constitutional authority to conduct foreign affairs." By contrast, Executive Order 10485 cites federal statutes for the permitting authority granted to the Department of Energy. The order states: Section 202(e) of the Federal Power Act, as amended ... requires any person desiring to transmit any electric energy from the United States to a foreign country to obtain an order from the Federal Power Commission authorizing it to do so... Section 3 of the Natural Gas Act ... requires any person desiring to export any natural gas from the United States to a foreign country or to import any natural gas from a foreign country to the United States to obtain an order from the Federal Power Commission authorizing it to do so. Executive Order 10485 empowered the Federal Power Commission (FPC) to receive applications for and to issue Presidential Permits for cross-border electric facilities. The Department of Energy Organization Act of 1977 eliminated the Federal Power Commission, transferring its functions to either the newly created Department of Energy (DOE) or the Federal Energy Regulatory Commission (FERC), an independent federal agency that regulates the interstate transmission of electricity, natural gas, and oil. Section 402(f) of the act specifically reserved import/export permitting functions for DOE rather than FERC. As a result, DOE took over the FPC's Presidential Permit authority for border crossing facilities under Executive Order 10485 pursuant to the act. The authority to issue Presidential Permits for natural gas pipeline border crossings was subsequently transferred to FERC in 2006 via DOE Delegation Order No. 00-004.00A. As described above, Presidential Permits authorize specific border crossing facilities. Obviously a new facility requires a new Presidential Permit, and a significant overhaul of existing facilities would similarly require a new or amended Permit to authorize the changed facility. On the other hand, at some point a change to a facility is presumably small enough that no new permit would be required. Because every border crossing facility and proposed modification is different, there is no bright line rule about when a proposed modification is significant enough to require a new or amended Presidential Permit. For example, the Presidential Permit issued by the State Department in 2013 for the NOVA Chemicals natural gas liquids pipeline states "the permittee shall make no substantial change in the United States facilities, the location of the United States facilities, or in the operation authorized by this permit until such changes have been approved by the Secretary of State or the Secretary's delegate." Thus, whether a Presidential Permit must be amended ultimately will depend on both the nature of the modification and on the exact nature of the authorization found in the existing permit language. However, the relevant agencies have provided some helpful guidance on this subject. FERC regulations governing authorization of facilities to construct, operate, or modify natural gas import/export facilities are set forth at 18 C.F.R. Part 153. Applications for Presidential Permits are subject to these regulatory requirements. 18 C.F.R. SS 153.5 articulates "who should apply" for such FERC authorizations. The regulation provides that any person proposing to site, construct, or operate natural gas import or export facilities or to "amend an existing Commission authorization, including the modification of existing authorized facilities," must apply for a permit. In February 2007, the State Department's Bureau of Western Hemisphere Affairs--Office of Canadian Affairs published Interpretive Guidance on Non-Pipeline Elements of E.O. 13337, A mending E.O. 11423 . As the title indicates, the document is not binding with respect to pipeline facilities, although dialogue with State Department staff indicated that the guidance found in the document would be applied in a similar manner to pipeline facility permitting decisions. It may also be informative as applied to how other agencies may view the need for new or amended Presidential Permits for the facilities under their purview. According to the Interpretive Guidance , any "substantial modifications of existing border crossings" would fall under Executive Order 13337 and thus require a new or amended Presidential Permit. The Interpretive Guidance defines "substantial modifications" as 1. An expansion beyond the existing footprint or land port-of-entry inspection facility, including its grounds, approaches, and appurtenances, at an existing border crossing in such a way that the modification effectively constitutes a new piercing of the border; 2. a change in ownership of a border crossing that is not encompassed within or provided for under an applicable Presidential permit; 3. a permanent change in authorized conveyance (e.g., commercial traffic, passenger vehicles, pedestrians, etc.) not consistent with (a) What is stated in an applicable Presidential permit, or (b) current operations if a Presidential permit or other operating authority has not been established for the facility; or 4. any other modification that would render inaccurate the definition of covered U.S. facilities set forth in an applicable Presidential permit. The Interpretive Guidance also provides that projects should be placed in one of three categories: Red (both notification to the State Department and a new or amended permit is required), Yellow (notification required and a new permit may be required), and Green (neither notification nor a permit required). The "Red" category is described in language similar to that found in the document's definition of a "substantial modification." The "Yellow" category includes capacity changes, temporary changes due to construction projects and changes in responsibility for ownership, operations, or maintenance, among other things. The "Green" category includes regular maintenance and repair work, exterior changes to a facility within its existing footprint, systems changes (e.g., HVAC, electrical), and changes made at the request or direction of the State Department, among other changes. DOE regulations provide limited express guidance as to when an electric transmission facility modification is significant enough to trigger a requirement that a new or amended Presidential Permit be obtained. For example, DOE regulations note that a new permit application is required when the border crossing facility changes ownership. Recent permitting decisions, however, suggest that any modification that goes beyond regular maintenance and may have reliability impacts would likely require the party to obtain a new or amended Presidential Permit. For example, a new Presidential Permit issued to Energia Sierra Juarez by DOE in August 2012 provided in part that the permit should be amended if/when subsequent phases of a related wind generation project necessitate changes to the facility, including higher capacity transmission lines or other changes that could impact the reliability of the U.S. power grid. Six months earlier, DOE issued a new Presidential Permit to ITC Transmission to account for transformer upgrades at an existing facility. The source of the executive branch's permitting authorities in the Executive Orders described above is not explicitly stated in all cases. Powers exercised by the executive branch are authorized by legislation or are inherent presidential powers based in the Constitution. Executive Order 11423 does not reference any statute or constitutional provision as the source of its authority, although it does state that "the proper conduct of foreign relations of the United States requires that executive permission be obtained for the construction and maintenance" of border crossing facilities. Executive Order 13337 refers only to the "Constitution and the Laws of the United States of America, including Section 301 of title 3, United States Code. " 27 3 U.S.C. SS 301 simply provides that the President is empowered to delegate authority to the head of any department or agency of the executive branch. Executive Order 10485 cites Section 202(e) of the Federal Power Act as a source of executive branch authority to permit cross-border electricity transmission facilities and Section 3 of the Natural Gas Act as a source of the executive branch authority to permit cross-border natural gas pipelines. It also states that "the proper conduct of the foreign relations of the United States requires that executive permission be obtained for the construction and maintenance at the borders of the United States of facilities for the exportation or importation of electric energy and natural gas." Federal courts have addressed the legitimacy of cross-border permitting authority not explicitly granted by statute. In Sisseton-Wahpeton Oyate v. U.S. Department of State , the plaintiff tribes asked the court to suspend or revoke a presidential permit issued under Executive Order 13337 for the TransCanada Keystone Pipeline. The plaintiffs claimed that the issuance of the national interest determination and the border crossing permit for the project violated NEPA and the Administrative Procedure Act (APA). The U.S. District Court for the District of South Dakota determined that even if the plaintiffs' injury could be redressed, "the President would be free to disregard the court's judgment," as the case concerned the President's "inherent constitutional authority to conduct foreign policy," as opposed to statutory authority granted to the President by Congress. The court further found that even if the tribes had standing, the issuance of the Presidential Permit was a presidential action, not an agency action subject to judicial review under APA. The court stated that the authority to regulate the cross-border pipeline lies with either Congress or the President. The court found that "Congress has failed to create a federal regulatory scheme for the construction of oil pipelines, and has delegated this authority to the states. Therefore, the President has the sole authority to allow oil pipeline border crossings under his inherent constitutional authority to conduct foreign affairs." In Sierra Club v. Clinton , the plaintiff Sierra Club challenged the Secretary of State's 2009 decision to issue a permit authorizing the Alberta Clipper. The plaintiff claimed that issuance of the permit was unconstitutional because the President had no authority to issue the permits referenced in Executive Order 13337. The defendant responded that the authority to issue permits for these border crossing facilities "does not derive from a delegation of congressional authority ... but rather from the President's constitutional authority over foreign affairs and his authority as Commander in Chief." The U.S. District Court for the District of Minnesota agreed, noting that the defendant's assertion regarding the source of the President's authority has been "well recognized" in a series of Attorney General opinions, as well as a 2009 judicial opinion. The court also noted that these permits had been issued many times before and that "Congress has not attempted to exercise any exclusive authority over the permitting process. Congress's inaction suggests that Congress has accepted the authority of the President to issue cross-border permits." Based on the historical recognition of the President's authority to issue those permits and Congress's implied approval through inaction, the court found the permit requirement for border facilities constitutional. As the aforementioned cases show, courts have analyzed the President's exercise of cross-border infrastructure permitting authority and have held that it is a legitimate exercise of the President's constitutional authority, and that it does not require legislative authorization. However, they have indicated that congressional inaction plays a role in validating this exercise of executive branch authority, suggesting that these roles could be amended through legislation should Congress choose to do so. During the Obama presidency, Congress considered various bills to amend the presidential permitting process generally, or to authorize construction and operation of the Keystone XL border crossing facility. The January 24, 2017, Executive Memorandum issued by President Trump and the subsequent permitting of the Keystone XL pipeline border crossing facility by the State Department in accordance with that Memorandum appear to have obviated the need for the latter in this case. However, many in Congress still seek to overhaul the existing permitting framework, which was created entirely by the executive branch, in favor of a framework established by statute. Accordingly, on July 19, 2017, the House passed the Promoting Cross-Border Energy Infrastructure Act ( H.R. 2883 ). Among other provisions, the act would eliminate the Presidential Permit requirement for cross-border crude oil, petroleum products, natural gas, and electric transmission infrastructure (SS 2(d)). Instead, developers would require "certificates of crossing" from FERC for cross-border oil, petroleum products, and gas pipelines, or from DOE for cross-border electric transmission (SS 2(a)(2)). However, the statute does not appear to apply to other hazardous liquids infrastructure--notably natural gas liquids (e.g., propane) pipelines--so the State Department would retain its traditional Presidential Permit authority for these facilities.

Controversy over the proposed Keystone XL pipeline project has focused attention on U.S. requirements for authorization to construct and operate pipelines and other energy infrastructure at international borders. For the most part, developers are required to obtain a Presidential Permit for border crossing facilities. The agency responsible for reviewing applications and issuing Presidential Permits varies depending on the type of facility. Oil and other hazardous liquids pipelines that cross borders are authorized by the U.S. Department of State. Natural gas pipeline border crossings are authorized by the Federal Energy Regulatory Commission (FERC). Electricity transmission facilities are authorized by the Department of Energy (DOE). CRS has identified over 100 operating or proposed oil, natural gas, and electric transmission facilities crossing the U.S.-Mexico or U.S.-Canada border. The authority for federal agencies to review applications and issue Presidential Permits for oil pipelines comes from a series of executive orders. These executive orders have been upheld by the courts as legitimate exercises of the President's constitutional authority over foreign affairs as well as his authority as Commander in Chief. It is worth noting, however, that Congress has enacted statutes applying to cross-border natural gas and electric transmission facilities that require developers of such projects to apply for authorization from executive branch agencies. In recent years, in the context of the Presidential Permit application for the proposed Keystone XL crude oil pipeline project, Congress has attempted to modify the permitting process for border crossing energy facilities. An Executive Memorandum issued on January 24, 2017, by President Trump inviting TransCanada Corp. to resubmit its Presidential Permit application for the Keystone XL border crossing facility, and the Administration's subsequent issuance of the Presidential Permit, reduced any need for legislative action in order to authorize the border crossing for that particular project. However, Congress remains interested in overhauling the existing permitting framework, which was created exclusively by the executive branch, in favor of a framework which would be established by statute. Accordingly, on July 19, 2017, the House passed the Promoting Cross-Border Energy Infrastructure Act (H.R. 2883), which would eliminate the Presidential Permit requirement for cross-border crude oil, petroleum products, natural gas, and electric transmission infrastructure. Instead, developers would require "certificates of crossing" from FERC for cross-border oil, petroleum products, and gas pipelines, or from DOE for cross-border electric transmission. The statute does not appear to apply to other hazardous liquids infrastructure--notably natural gas liquids (e.g., propane) pipelines--so the State Department would retain its traditional Presidential Permit authority for these facilities.

The U.S. housing market began to slow in early 2006 and has led to what many economists believe is the worst housing finance environment since the Great Depression of the 1930s. As a result, there has been a significant rise of late mortgage payments, foreclosures, and bankruptcies nationwide. High unemployment has exacerbated these problems. Many believe the market will get worse in the absence of changes in laws and/or regulations. For instance, Mark Zandi, the chief economist of Moody's Economy.com, estimates that 4.9 million foreclosures will occur between 2009 and 2011. In an attempt to stem the tide of foreclosures and bankruptcies, a number of voluntary loan modification programs have been initiated, including the Obama Administration's Making Home Affordable Program. These programs seek to make mortgage payments more affordable to homeowners who are having, or likely will have difficulty meeting their mortgage obligations, while also avoiding the costs for both debtors and creditors associated with a foreclosure or bankruptcy. However, there are a number of obstacles that have operated to discourage mortgage servicers and creditors from performing loan modifications in advance of foreclosure or a petition for bankruptcy, even in situations in which a modification would be the most economically beneficial outcome for most interested parties. There are many barriers to a successful loan modification. One notable obstacle is the way in which mortgage servicers are paid. Servicers often do not hold an ownership interest in the underlying mortgage. Instead, they process and distribute borrowers' principal and interest payments for those who do own the mortgage. Mortgage servicers' primary source of revenue is through a fixed percentage of a borrower's regular monthly mortgage payments. When borrowers become delinquent or default on their monthly payments, servicers also may engage in loss mitigation and initiate foreclosure proceedings on behalf of mortgage holders. In fact, these actions usually are performed simultaneously. Foreclosure proceedings generally are more streamlined than loss mitigation efforts, which are more tailored to the individual characteristics of borrowers and their underlying homes. As a result, engaging in loss mitigation efforts usually is more expensive and time consuming for servicers than initiating foreclosure. In absence of a structured loss mitigation or loan modification program, such as the Making Home Affordable Program, that offers incentive payments for participation, servicers often do not receive any compensation for the time and energy they spend engaging in loss mitigation. On top of these costs, servicers, under some circumstances, are contractually obligated to advance principal and interest payments to secondary market participants when the borrower is delinquent. Servicers only begin receiving payment when delinquent borrowers resume monthly payments, and because servicers usually get paid a set percentage, their compensation decreases when borrowers' monthly payments are reduced. On the other hand, servicers are able to recoup certain fees assessed during the foreclosure process. These fees can be significant. Thus, servicers often receive more in compensation through a foreclosure than they do through loss mitigation or loan modification. This is especially true where a servicer goes through the time and effort of offering a borrower a modification only to have the borrower redefault in the near future. Some argue that voluntary modification programs have not been effective enough. In a letter sent to Speaker of the House Nancy Pelosi and House Minority Leader John Boehner, the Attorneys General of 22 states and the District of Columbia stated: In recent months, State Attorneys General have especially focused on urging mortgage servicers to avoid unnecessary foreclosures by modifying unaffordable loans in a manner that serves holders, servicers, homeowners, and the public. Through the multi-state Foreclosure Prevention Working Group, we collected data which demonstrates that voluntary loan modification measures have failed.... Because most troubled mortgages are securitized, multiple stakeholders may be involved in the decision to modify mortgage loans, causing a continued paralysis. Although some major lenders have recently embarked on loan modifications on a wide scale, many servicers and secondary market investors remain unwilling or unable to act, even when their own economic interests dictate otherwise. Proponents of amending the Bankruptcy Code believe allowing strip down of primary residences would have two important results. First, it would encourage the voluntary modification of mortgages before default or delinquency that may drive borrowers into bankruptcy. Second, they believe that where voluntary workouts prior to bankruptcy could not be achieved, strip down would adjust the mortgage terms such that the costs and benefits are efficiently spread among debtors and creditors, while allowing debtors to remain in the home after bankruptcy. Senator Durbin, before the Senate Committee on the Judiciary, stated: As we heard at last year's hearing, the benefits of this proposal [to allow the modification of certain mortgage debts in bankruptcy] are clear. We heard testimony that: *My legislation would significantly reduce the number of foreclosures and help hundreds of thousands of families stay in their homes. *Mortgage modification in bankruptcy benefits everyone - the homeowner, the lender, the neighboring homeowners and the economy - far more than foreclosure. *My proposal would give lenders, servicers and investors a real incentive to voluntarily rework mortgages.... Professor Adam Levitin, at the same Senate Judiciary Committee hearing, explained: In a perfectly functioning market without agency and transaction costs, lenders would be engaged in large-scale modification of defaulted or distressed mortgage loans, as the lenders would prefer a smaller loss from modification than a larger loss from foreclosure. Voluntary modification, however, has not been happening on a large-scale, for a variety of reasons, most notably contractual impediments, agency costs, practical impediments, and other transaction costs. If all distressed mortgages could be modified in bankruptcy, it would provide a method for bypassing the various contractual, agency, and other transactional inefficiencies. Permitting bankruptcy modification would give homeowners the option to force a workout of the mortgage, subject to the limitations provided by the Bankruptcy Code. Moreover, the possibility of a bankruptcy modification would encourage voluntary modifications, as mortgage lenders would prefer to exercise more control over the shape of the modification. An involuntary public system of mortgage modification would actually help foster voluntary, private solutions to the mortgage crisis.... Allowing bankruptcy to serve as a forum for distressed homeowners to restructure their mortgage debts is both the most moderate and the best method for resolving the foreclosure crisis and stabilizing mortgage markets. Unlike any other proposed response, bankruptcy modification offers immediate relief, solves the market problems created by securitization, addresses both problems of payment reset shock and negative equity, screens out speculators, spreads burdens between borrowers and lenders, and avoids both the costs and moral hazard of a government bailout. Others argue that amending the Bankruptcy Code alone would not promote voluntary modifications outside of bankruptcy because such legislation would not directly address the payment, tax, accounting, and litigation concerns that are the main deterrent to voluntary modifications. For instance, a group of Columbia University professors argue that [P]roposals to change the [Bankruptcy] Code could dramatically increase bankruptcy-filing rates. Servicers will prefer mortgage modification in bankruptcy because their expenses are reimbursed in bankruptcy, not outside it. Thus, proposed reforms could push millions of borrowers into bankruptcy, delaying the resolution of the current crisis for years. Still others believe allowing modifications of these mortgages in bankruptcy will reduce market stability. For instance, Professor Mark S. Scarberry, a Resident Scholar at the American Bankruptcy Institute, believes allowing strip down of primary residence mortgages would "cause problems in the secondary mortgage market" and would "substantially change the risk characteristics of home mortgages...." Additionally, David G. Kittle, Chairman of the Mortgage Bankers Association, has testified: One of the greatest potential destabilizing initiatives is the topic of discussion today - allowing bankruptcy "cramdown" for home mortgages.... We understand the well intentioned goal of such legislation is to provide a back stop against the large numbers of foreclosures. However, the unintended result would be large numbers of bankruptcies, higher losses to servicers, lenders and investors, and reduced ability by the financial industry to extend affordable credit. Such bankruptcy reform will have a negative impact on individual borrowers, a housing recovery and the economy as a whole. At least four bills that would amend Section 1322 of the U.S. Bankruptcy Code have been introduced in the 111 th Congress. These bills are S. 61 and its House companion, H.R. 200 (the Helping Families Save Their Homes in Bankruptcy Act of 2009); H.R. 1106 (the Helping Families Save Their Homes Act of 2009); and H.R. 225 (the Emergency Home Ownership and Mortgage Equity Protection Act). Additionally, an amendment, S.Amdt. 1014 , to S. 896 (the Helping Families Save Their Homes Act of 2009; Senate companion bill to H.R. 1106 ) would allow for the judicial modification of certain mortgages in bankruptcy but was voted down 45-51 and withdrawn on April 30, 2009. S. 896 was signed into law on May 20, 2009 as P.L. 111-22 without making any changes to the Bankruptcy Code. More recently, during floor consideration of H.R. 4173 , the Wall Street Reform and Consumer Protection Act of 2009, the House voted down an amendment that would have allowed strip down of certain mortgages in bankruptcy. H.Amdt. 534 (Amdt. 018 as printed in H.Rept. 111-370 ) failed by a vote of 188-241. This report provides an overview of the general Chapter 13 process and analyzes how these pieces of legislation seek to amend Chapter 13. As they, in some cases, deal with matters beyond the scope of this report, the analysis of them is limited to proposed effects on when the modification of mortgages secured by the debtor's primary residence would be allowed; when prepayment penalties on these loans could be waived; whether and to what extent repayment of these loans would be allowed; whether and to what degree interest rates and annual percentage rates (APRs) on these loans could be modified; and whether and in what circumstances the credit counseling requirement could be waived or otherwise adjusted. Bankruptcy provides an avenue by which debtors may get relief from their debts. Chapter 13 governs reorganizations for most individuals. A reorganization generally means that debts are paid from the debtors' future income. Outside of bankruptcy, debtors and creditors may attempt to consensually modify the terms of their contractual obligations. If the parties attempt to reach a voluntary workout outside of bankruptcy, the Chapter 13 framework may serve as a baseline for negotiations with the parties understanding that if they cannot agree, the terms may be modified in accordance with the parameters of the Code if the debtor files and qualifies for bankruptcy. When a qualified debtor cannot meet outstanding obligations or negotiate revised payments with his or her creditors, the debtor may file a petition for an individual reorganization. In most cases, debtors must receive credit counseling before filing a Chapter 13 petition. Under Chapter 13, the debtor is required to file a proposed reorganization plan with the court. The proposed Chapter 13 plan generally is submitted at the same time as the petition for bankruptcy. Section 1322(a) states the requirements for all plans. Section 1322(b) states additional parameters that a plan may meet, if applicable. If the plan meets the Code's requirements, including the guidelines of Section 1322, the court may confirm the plan in accordance with Section 1325. Chapter 13 plan disputes among debtors and creditors are settled by the bankruptcy judge. The Code provides courts some leeway to adjust the value of certain debts. Many unsecured debts may be reduced or discharged. For many secured debts, the court has "strip down"--also, commonly referred to as "cram down"--authority. Strip down is the power to lower, over the creditor's objections, the amount the debtor must pay the creditor for the secured claim to as low as the collateral's fair market value. Amounts in excess of fair market value are treated as unsecured debt and may be discharged. Among the secured debts that the court may not strip down under the current Chapter 13 are those that are secured by the debtor's principal residence. Section 1322(b)(2) states in relevant part, "the plan may ... modify the rights of holders of secured claims, other than a claim secured only by a security interest in real property that is the debtor's primary residence." Other real property liens, however, are commonly modified in bankruptcy reorganizations. As a general rule, a real property lien is only protected as a nondischargeable secured debt up to the market value of the collateral. Indebtedness under a mortgage or security interest is treated as unsecured--and therefore modifiable or potentially dischargeable to the extent that the amount of indebtedness exceeds the value of the collateral. The Code allows a court to modify a mortgage secured by the debtor's vacation home, investment home, and family farm, for instance, but by virtue of SS 1322(b)(2)--and a parallel provision in Chapter 11 --a court may not strip down the claim on a mortgage secured by the same individual's primary residence. Even after this provision was enacted by the Bankruptcy Reform Act of 1978, some courts interpreted the Code as allowing strip down of primary residences until they were overruled by a 1992 U.S. Supreme Court decision. Hence, the Code's prohibition on the modification of liens that secure a primary residence is arguably the exception, not the rule. The purpose of the exception, at least based on analysis of its legislative history as expressed in a concurring Supreme Court opinion by Justice Stevens, was to "encourage the flow of capital into the home lending market." The prohibition on strip down of primary residence mortgages limits debtors' ability to protect their homes from creditors through bankruptcy. When debtors file for chapter 13 protection, foreclosure proceedings on their primary residence can be stopped (as a result of the automatic stay). Additionally, the Code allows debtors to pay arrearages on the mortgage (and potentially other debts) over three to five years as part of their chapter 13 reorganization plan. However, these payments would be in addition to their normal monthly mortgage payments. As a result, two types of debtors are most likely to be able to save their home through a chapter 13 petition. The first group consists of those debtors who have high levels of unsecured debts, which can be reduced under the Code. Debtors in this category are able to allocate more of their income to pay off the mortgage arrearages while continuing their regular mortgage payments because of the reduced burden from their unsecured debts. The second group consists of those who defaulted on debts because of a temporary loss of income, for example, as a result of job loss or a medical condition. Debtors in this category could be able to meet their normal mortgage obligations while also repaying arrearages if they are able to find a new job or otherwise regain steady income. Thus, homeowners generally must have incomes at the time of their bankruptcy filings that are sufficient to permit them to meet their future mortgage payments and other living expenses. To receive a bankruptcy discharge and to cure defaults on their mortgage loans, families need to stay current on their ongoing mortgage obligations. A family's success in saving its home in bankruptcy may turn in large part on the relationship between its current income and its housing costs. Allowing primary residence mortgages to be stripped down in bankruptcy may increase the number of homeowners who benefit from a bankruptcy filing, but as discussed above, it also could be detrimental to others. S. 61 (the Helping Families Save Their Homes in Bankruptcy Act of 2009), as introduced, would allow for certain modifications of debts secured by the debtor's primary residence "that is the subject of a notice that a foreclosure may be commenced." The foreclosure process varies by state. In some states, the process can start and finish in a matter of days. Requiring a foreclosure notice before a debtor may take advantage of the strip down in bankruptcy may limit the law's effectiveness because it could force a debtor to file a bankruptcy petition within a short period of time. Making the decision to file for bankruptcy may be difficult to do quickly because potential debtors may desire to compare bankruptcy to other options based on the effect a reorganization is likely to have on their ability to retain certain property, their credit worthiness, their future income, etc. Potential debtors may need to discuss their situation with a bankruptcy attorney in order to make a knowledgeable decision. If a qualified debtor's mortgage meets the above requirements, then the debtor's Chapter 13 reorganization plan may modify the terms of the mortgage debt in several different ways. First, the secured claim may be stripped down to the fair market value of the property, and the remaining balance would be treated as an unsecured claim. Second, the plan may prohibit, reduce, or delay changes in variable interest rates. This provision would address, in part, mortgages that started with relatively low fixed rates, but subsequently adjusted to a significantly higher variable rate. These low, initial rates are often referred to as teaser rates. Borrowers who could meet the payments at the introductory rate may not be able to afford the higher, adjusted rate. Third, the plan may allow for payment of the qualifying mortgage debt for 40 years less the number of years the loan has been outstanding or for the remaining payment term, whichever is longer. This provision would not adjust the payment of other debts beyond the normal three- to five-year term of repayment plans. In other words, the bill would allow for repayment of modified primary residence debts over 40 or more years, but the repayment period of all other debts would not be changed by the bill. Requiring debtors to pay off a potentially large debt, like a primary residence mortgage, in five years or less could be prohibitively difficult and could undermine the effectiveness of the law. This provision of S. 61 is important because most courts interpret the current Code as requiring debtors to pay off the entire secured claim of non-primary residence mortgages that are modified in accordance with SS 1322(b)(2) during the three- to five-year plan. Fourth, plans may provide a fixed interest rate based on the prevailing rate as published by the Board of Governors for the Federal Reserve System, plus a reasonable yield for risk. This provision would allow the reduction of fixed interest rates to levels consistent with current market conditions for comparable mortgages. Fifth, plans may waive prepayment penalties that are provided for in the loan document. Prepayment penalties are intended to cover the mortgage holder for lost interest payments incurred due to early payment. These fees were especially common in subprime mortgages. Finally, the bill would allow for the elimination of the Code's credit counseling requirement if the debtor certifies to a court that a foreclosure sale has been scheduled on the debtor's principal residence. This waiver would remove a procedural hurdle that could slow the debtor's ability to file a bankruptcy petition, which may be important in light of the streamlined foreclosure process, as discussed above. H.R. 200 (the Helping Families Save Their Homes in Bankruptcy Act of 2009) was reported ( H.Rept. 111-19 ) by the House Judiciary Committee on February 24, 2009. This bill was a mirror image of S. 61 when it was introduced, but markup of the bill by the House Judiciary Committee resulted in several substantive changes relevant to this report. First, modifications could only be made to qualifying debts that were entered into prior to the bill's enactment date. Proponents argue that limiting strip down to existing debts would reduce the likelihood that the bankruptcy changes would increase overall mortgage rates. Second, the bill makes clear that the ability to modify debts secured by a debtor's primary residence applies to subordinate debts in addition to primary debts. Many homeowners have more than one mortgage on their home, for instance from financing a "piggy-back" loan to cover some or all of the 20% of the sales price traditionally required as a downpayment to purchase a home. Third, the bill would change the way in which fixed rates would be calculated for modified mortgages. Rather than relying on an index based on Treasury securities, H.R. 200 would be based upon an index of average prime rates that is published by the Federal Financial Institutions Examination Council (FFIEC). A premium for risk would still be added to the FFEIC average rate. The Federal Reserve Board and many mortgage industry groups believe an index based on average prime offer rates is a more accurate and consistent way to establish mortgage rates than reliance on Treasury securities. Fourth, H.R. 200 includes a profit sharing provision that would require debtors who have their mortgages modified in bankruptcy and sell the home within four years of the modification to share the net proceeds of the sale with their creditors. The amount that would have to be shared would decrease each year after the modification. The debtor would have to pay the creditor 80% of the net proceeds of a sale within the first year of modification; 60% for a sale in the second year; 40% for a sale in the third year; and 20% for a sale in the fourth year. The net proceeds would be calculated by subtracting the amount of the modified secured claim, the sales costs, and the value of home improvements made from the sales price. The bill also appears to place a ceiling on the amount creditors may recoup through the profit sharing provision to the difference between the secured claim before the bankruptcy and the amount of the modified claim; however, the language of this portion of the provision is less than clear. This profit sharing provision would limit the ability of debtors to quickly profit off of a stripped down mortgage and would allow both creditors and debtors to reap the benefits of a stabilized housing market. It is unclear if or to what extent holders of secondary mortgages would be able to share in the net proceeds based on this provision. Fifth, debtors would not be able to modify debts secured by their primary residence without certifying that they attempted to discuss a loan modification with creditors before filing for bankruptcy or that a foreclosure sale is scheduled to take place within 30 days of the bankruptcy filing. This provision would force most debtors to seek a voluntary loss mitigation effort before being able to take advantage of the change in the Bankruptcy Code. However, because no action is required by creditors, debtors would not be prevented from reaping the bill's benefits simply because creditors failed to respond to debtors' requests for voluntary relief or were unable or unwilling to grant such relief. Sixth, modifications would not be available to debtors that received a refinance, an extension, or a renewal of mortgage credit based on "the debtor's material misrepresentation, false pretenses, or actual fraud." This provision would bar debtors who arguably are less deserving of help from taking advantage of the bill. Finally, H.R. 200 expressly states that the changes made by the bill would not in anyway change the mortgage insurance obligations of the Federal Housing Administration (FHA), the Department of Agriculture (USDA), or the Veterans Administration (VA). Some have questioned how these federal mortgage insurance programs would be affected by changes to the Bankruptcy Code in absence of an explicit legislative statement on the issue. H.R. 1106 (the Helping Families Save Their Homes Act of 2009), as agreed to by the full House on Thursday, March 5, 2009, varies from H.R. 200 in several substantive ways that are relevant to this report. First, H.R. 1106 clarifies that the profit sharing provision ceiling is in fact the difference between the secured claim before the bankruptcy and the amount of the modified claim. In other words, creditors could only share in the net proceeds up to "the unpaid amount of the allowed secured claim" had the debt not been modified. Second, the bill extends the profit sharing provision for an additional year and increases the amount of the net proceeds that must be shared to 90% in the first year, 70% in the second year, 50% in the third year, 30% in the fourth year, and 10% in the fifth year. Third, debtors would not be able to modify debts secured by their primary residence without certifying that: (a) they attempted to discuss a loan modification with creditors before filing for bankruptcy; (b) they provided their mortgage creditor information on their income, debts, and expenses; and (c) they considered any offered loan modification meeting the requirements of the Obama Administration's Homeowner Affordability and Stability Plan (Obama Plan). However, these certifications would not be required if a foreclosure sale is scheduled to take place within 30 days of the bankruptcy filing. This provision may encourage voluntary loan modifications outside of bankruptcy by incentivizing creditors to delay setting a foreclosure sale date until they have been able to assess a debtor's ability to meet modified loan terms. Fourth, H.R. 1106 would prohibit debtors " con victed of obtaining by actual fraud the extension, renewal, or refinancing" of a primary residence mortgage from taking advantage of a mortgage modification in bankruptcy. Additionally, before approving a reorganization plan that modifies a primary residence mortgage, the bankruptcy judge must find that "the modification is in good faith." According to the bill, a modification would not be in good faith if "the debtor can pay all of his or her debts [including any future scheduled payment increases] ... without difficulty for the foreseeable future...." The bankruptcy judge, in assessing if the proposed modification is in good faith, also should take into account any affordable voluntary loan modification offered by the creditor that meets the Obama Plan requirements without reducing the mortgage principal. Fifth, at the request of either the debtor or the creditor, a bankruptcy judge may approve a reorganization plan that reduces the interest rate so as to make a 30-year mortgage affordable to the debtor without reducing the mortgage principal. This provision would potentially allow the interest rate to be reduced below the average prime rate as long as the principal owed is not modified. Sixth, the bill makes clear that it would apply to any bankruptcy case that is initiated after enactment, that is pending on appeal, or is appealable at the time of enactment. Seventh, the bill would provide the FHA, VA, and USDA Secretaries the statutory authority to pay out claims on insured mortgages that are modified pursuant to the bill, under certain circumstances. Finally, debtors that certify they have received a foreclosure notice on their principal residence would have to receive credit counseling within 30 days of filing a petition for bankruptcy. H.Amdt. 534 to H.R. 4173 (the Wall Street Reform and Consumer Protection Act of 2009) failed by a vote of 188-241. Its substance is largely the same as H.R. 1106 , as agreed to by the full House in March of 2009. S.Amdt. 1014 to S. 896 (the Helping Families Save Their Homes Act of 2009; Senate companion bill to H.R. 1106 ) would allow for the judicial modification of certain mortgages in bankruptcy but was voted down 45-51 and withdrawn on April 30, 2009. S. 896 was signed into law on May 20, 2009, as P.L. 111-22 without making any changes to the Bankruptcy Code. The language of S.Amdt. 1014 was similar to that of H.R. 1106 . The most significant difference between the two is that S.Amdt. 1014 would allow for the modification of a smaller set of mortgages. The amendment sought to prohibit borrowers who exceed certain income levels and borrowers who received offers from their lenders to modify or refinance into affordable mortgages from qualifying for bankruptcy protection. S.Amdt. 1014 would allow judicial modification of mortgages only when: (a) the mortgage was originated before January 1, 2009; (b) the mortgage had a principal balance of less than the maximum amount allowed under the Obama Plan (currently $729,750 for a single-unit home); (c) the mortgage was at least 60 days delinquent; (d) the mortgage was subject to a foreclosure notice, if it was the senior security interest; and (e) the debtor sought a "qualified loan modification offer" or a "qualified loan refinance offer" before filing for bankruptcy. Also, if the debtor's income was more than or equal to 80% of the area median income and the debtor received a "qualified loan modification offer" or a "qualified loan refinancing offer" or the debtor's monthly mortgage payment prior to modification resulted in a debt-to-income ratio (DTI) of less than 31%, the debtor would not qualify for a mortgage modification in bankruptcy. A debtor whose income was less than 80% of the area median income and who had received a "qualified loan modification offer" or a "qualified loan refinancing offer" or whose monthly mortgage payment prior to modification was less than 31% DTI would not be authorized for a principal reduction under S.Amdt. 1014 , but his or her mortgage could have been modified in the other ways allowed under the amendment (e.g., interest rate reduction). The profit sharing provision of S.Amdt. 1014 also varied from that of H.R. 1106 . S.Amdt. 1014 would require debtors who had their mortgages modified in bankruptcy to share one-half of the net proceeds with the creditor if the home was sold anytime during the bankruptcy case. H.R. 225 (the Emergency Homeownership and Equity Protection Act), as introduced, is identical to S. 61 with regard to the terms discussed in this report, except that modifications could only be made to qualifying debts that were entered into prior to the bill's enactment date.

The U.S. housing market began to slow in early 2006 and has led to what many economists believe is the worst housing finance environment since the Great Depression of the 1930s. As a result, there has been a significant rise in late mortgage payments, foreclosures, and bankruptcies nationwide. High unemployment has exacerbated these problems. Mortgage market participants may voluntarily agree to adjust mortgage terms in order to help troubled borrowers continue to stay in their homes. However, there are a number of obstacles that may discourage mortgage servicers and creditors from performing loan modifications in advance of a petition for bankruptcy, even in situations in which a modification would be the most economically beneficial outcome for the majority of interested parties. There are many barriers to a successful loan modification. One notable obstacle is the way in which mortgage servicers are paid. Servicers often receive more in compensation through a foreclosure than they do through loss mitigation or loan modification. This is especially true where a servicer goes through the time and effort of offering a borrower a modification only to have the borrower redefault in the near future. Bankruptcy provides an avenue by which debtors may get relief from their debts. Chapter 13 of the U.S. Bankruptcy Code governs reorganizations for most individuals. The Code provides courts some leeway to adjust the value of certain debts. For many secured debts, the court has "strip down"--also, commonly referred to as "cram down"--authority. Strip down is the power to lower, over the creditor's objections, the secured claim to as low as the collateral's fair market value and treat the balance of the debt as an unsecured claim. However, Section 1322(b)(2) of the Code prohibits the strip down of debts secured by the debtor's primary residence. At least four bills that would amend Section 1322 of the Bankruptcy Code have been introduced in the 111th Congress. These bills are S. 61 and H.R. 200 (the Helping Families Save Their Homes in Bankruptcy Act of 2009), H.R. 1106 (the Helping Families Save Their Homes Act of 2009), and H.R. 225 (the Emergency Home Ownership and Mortgage Equity Protection Act). Additionally, an amendment, S.Amdt. 1014, to S. 896 (the Helping Families Save Their Homes Act of 2009; Senate companion bill to H.R. 1106) would allow for the judicial modification of certain mortgages in bankruptcy but was voted down 45-51 and withdrawn on April 30, 2009. S. 896 was signed into law on May 20, 2009, as P.L. 111-22 without making any changes to the Bankruptcy Code. More recently, during floor consideration of H.R. 4173, the Wall Street Reform and Consumer Protection Act of 2009, the House voted down an amendment that would have allowed strip down of certain mortgages in bankruptcy. H.Amdt. 534 (Amdt. 018 as printed in H.Rept. 111-370) failed by a vote of 188-241. This report provides an overview of the general Chapter 13 process and analyzes how these pieces of legislation would amend certain sections of Chapter 13.

The following list provides the names of the independent counsels (called "specialprosecutors" until 1983) who had been appointed by the special Division of the Court for AppointingIndependent Counsels, United States Court of Appeals for the District of Columbia, upon applicationfrom the Attorney General of the United States under the provisions originally enacted in the Ethicsin Government Act of 1978. (1) The list sets out in summary fashion the areas or subjects ofinvestigation by the independent counsel and briefly highlights the results of those investigations. The cost information for investigations is also included, derived either from published reports of theaudits by the Government Accountability Office (GAO, formerly the General Accounting Office),when that agency began auditing under the statute, or as set out in a Senate Committee onGovernmental Affairs report from information received from the Department of Justice aboutinvestigations prior to 1985. (2) The most current information on costs was derived by adding andcumulating the total expenditures (including unaudited amounts from other federal agencies and theamounts reimbursed to individuals for attorneys' fees when those figures are available) from thesix-month GAO audit reports on the independent counsel expenditures. (3) The list of independent counsels and special prosecutors includes those appointed by theSpecial Division of the Court, whose appointments were made a matter of public record. Noted alsoas "sealed" are those independent counsels whose identity and/or prosecutorial jurisdiction have beenkept confidential. Under the former federal law governing independent counsels, information on theappointment of independent counsels and on the targets of an investigation was generally to be keptconfidential unless the Division of the Court deemed it to be in the public interest to release, orunless and until an indictment or criminal information had been returned. (4) Total Costs of Investigations. There have been 20 independent counsel or specialprosecutor investigations initiated under the statutory mechanisms originally enacted as part of theEthics in Government Act of 1978. These investigations, according to reports from the Departmentof Justice concerning early special prosecutor and independent counsel investigations, and laterpublished audits from the Government Accountability Office, have cost, as of September 30, 2005,a total of approximately $228,712,589. Independent Counsel Law Expiration and Appointment of "Special Counsels." Thestatutory provisions for the appointment of independent counsels expired under a five year "sunset"provision at the end of June, 1999, when the law was not reauthorized by Congress, and thus no newindependent counsels may be appointed by the Special Division of the Court. Under the generalauthority of the Attorney General of the United States, however, the Attorney General may hire andappoint temporary personnel within the Department of Justice or reassign personnel within theDepartment to conduct investigations and prosecutions on behalf of the United States. Regulationsgoverning the selection and procedures of "special counsels" appointed by the Attorney General werepromulgated in 1999. (5) In addition to the statutory "independent counsel" investigations, there have been other "specialcounsel" investigations for which separate cost figures have been released. It was reported by GAOthat Robert Fiske's portion of the investigation of "Whitewater," prior to the 1994 reauthorizationof the Independent Counsel law, cost $6,073,000; (6) and that former Senator John Danforth's special counselinvestigation of the Waco incident has expended $15,536,793. (7) In addition, under the general statutory authority of the Attorney General to hire staff andoversee the conduct of federal criminal investigations and prosecutions, the Justice Department onDecember 30, 2003, designated Patrick Fitzgerald, United States Attorney for the Northern Districtof Illinois, as the "Special Counsel" to investigate the alleged unauthorized disclosure of a CIAemployee's identity. The Government Accountability Office ruled that the expenses for theinvestigation by Special Counsel Fitzgerald, although he was not appointed under the standing"Special Counsel" regulations promulgated by the Department of Justice, could be paid from thepermanent, indefinite appropriation for Independent Counsels in the Department of Justice, (8) and has indicated that the totalexpenses of that office, as of September 31, 2005, have been $902,118. (9) Results of Independent Counsel Investigations. Of the 20 independent counselinvestigations that were initiated under the former statutory mechanism, in a majority of the cases-- specifically in 12 of the investigations -- no indictments were brought against anyone investigated. Of the 8 investigations which did return at least one indictment, in 3 of those instances there was noindictment brought against the principal Government official originally named as the subject ortarget of that independent counsel's investigation. (10) In the remaining 5 investigations where the Federal officialnamed as the principal subject of the investigations was indicted, in 3 of such instances that principalGovernment official indicted was either acquitted, (11) or his conviction was overturned on appeal or remanded forre-trial and the matter dropped by the prosecution. (12) Thus, of the 20 independent counsel investigations initiated,although several independent counsel investigations resulted in multiple convictions of personsrelating either to the original subject matter or a peripheral matter, including the convictions offederal officials and former federal officials involved, only two federal officials who were actuallythe named subjects of the 20 investigations were finally convicted of or pleaded guilty to the chargesbrought. In the Independent Counsel Seymour investigation of presidential aide Michael Deaver,Mr. Deaver was convicted of the "collateral" offense of perjury, and received a suspended sentenceand a fine; while in the Independent Counsel Barrett investigation of Secretary Cisneros, Mr.Cisneros pleaded guilty to a misdemeanor charge, was fined, and was eventually pardoned by thePresident. The special prosecutors and independent counsels appointed by a special judicial panel at therequest of the Attorney General, under the provisions of federal law originally enacted in the Ethicsin Government Act of 1978, have included: 1. Arthur H. Christy (appointed November 29, 1979). Investigated allegations concerningPresident Carter's Chief of Staff Hamilton Jordan, regarding alleged cocaine use. In his final report,the special prosecutor found "insufficient evidence to warrant the bringing of criminal charges." (13) Final report filed May 28,1980. Cost of investigation: $182,000. (14) 2. Gerald J. Gallinghouse (appointed September 9, 1980). Investigated allegationsconcerning President Carter's national campaign manager Tim Kraft, regarding alleged cocaine use. In the final report, the special prosecutor found the allegations "so unsubstantiated that it did notwarrant further investigation." (15) Report filed January 15, 1982. Cost of investigation:$3,300. (16) 3. Leon Silverman (appointed December 29, 1981). Investigated allegations concerningPresident Reagan's Secretary of Labor Raymond J. Donovan, regarding bribery of labor unionofficials and certain connections to organized crime. The special prosecutor found "insufficientevidence to warrant any prosecution" and no "credible evidence" concerning the allegations in finaland supplemental investigative reports, filed June 25, 1982, and September 1982. (17) The cost of thisinvestigation was $318,000. (18) Further investigation commenced on June 11, 1985, uponreferral to investigate alleged false testimony before grand jury. No indictments sought. Filed finalinvestigative report on November 30, 1988. The cost of the second investigation was $7,200. (19) 4. Jacob A. Stein (sworn in April 2, 1984). Investigated allegations concerning PresidentReagan's nominee for Attorney General, Edwin Meese, regarding his finances, financial disclosureand other allegations including trading in public offices. Independent counsel Stein found "no basiswith respect to any of the eleven allegations" for bringing criminal charges. (20) Final report issuedSeptember 20, 1984. The cost of the investigation was $312,000. (21) 5. Alexia Morrison (appointed May 29, 1986). Alexia Morrison was appointed after theresignation of independent counsel James C. McKay (appointed April 23, 1986), to investigateallegations concerning former Assistant Attorney General Theodore B. Olson allegedly giving falsetestimony to Congress regarding the EPA "superfund" inquiry. Found that "there is insufficientcredible evidence" of false statements or obstruction of justice, that any prosecution based oncongressional testimony "would confront certain legal obstacles which would, at the minimum, cloudthe prospects for success," and that "there is no evidence" of a conspiracy to obstruct a congressionalcommittee's inquiry. (22) Final report released March 14, 1989. The cost of the investigation was $2,141,000. (23) 6. Whitney North Seymour Jr. (appointed May 29, 1986). Investigated charges concerningformer President Reagan aide Michael K. Deaver, regarding alleged violations of post-employmentconflict of interest laws in representing certain foreign clients before the White House after leavinggovernment employment. Michael Deaver was convicted, December 16, 1987, on three counts ofperjury. He was sentenced on September 23, 1988, to three years probation and fined$100,000. (24) Theindependent counsel's final report filed August 16, 1989. The cost of the investigation was$1,552,000. (25) 7. Lawrence E. Walsh (appointed December 19, 1986). Was named to investigate potentialcriminal misconduct of Lt. Colonel Oliver North, and other government officials, in the so-called"Iran Contra" matter concerning sale of arms to Iran and the alleged diversion of profits from the saleto support the Contras in Nicaragua in violation of federal law. Pleading guilty to various offensesrelated to the Iran-Contra matter were: Elliott Abrams, former Assistant Secretary of State forInter-American Affairs; Carl R. "Spitz" Channell, private fund-raiser; Alan D. Fiers, former chiefof CIA Central American task force; Albert Hakim, private businessman; Robert C. McFarlane,former National Security Advisor in Reagan White House; Richard R. Miller, head of a publicrelations firm; and Air Force Major General Richard V. Secord (Ret.). Convicted of federal offenseswere: Thomas Clines, former CIA agent; Clair George, former CIA deputy director; Lt. Col. OliverL. North (Ret.), National Security Council staff, convicted on three counts of federal criminal law,one of which was overturned by the United States Court of Appeals for the District of ColumbiaCircuit, the other two dropped by request of the Independent Counsel after the Court of Appealsremanded the convictions back to the trial court for determination of which charges were not"tainted" by North's immunized public testimony and admissions before Congress regarding theconduct which was the subject of the criminal convictions; (26) Rear Admiral John M.Poindexter, National Security Advisor, convicted of five felonies, all of which were overturned byan Appeals Court ruling that his and Colonel North's immunized congressional testimony was usedagainst him and tainted the convictions. (27) Persons indicted: Duane Clarridge, former chief of the LatinAmerican Division of the Operations Directorate, C.I.A.; Joseph F. Fernandez, former CIA stationchief whose indictment was dismissed when CIA refused to release classified information neededfor his defense; and Casper Weinberger, former Secretary of Defense. On December 24, 1992, President George Bush pardoned Casper Weinberger and DuaneClarridge, both of whom had been indicted and were awaiting trial; and pardoned Clair George,Elliott Abrams, Alan Fiers and Robert McFarlane, all of whom had either been found guilty or hadpleaded guilty to various offenses in connection with the "Iran-Contra" matter. The final report of the Independent Counsel in the "Iran-Contra" matter was filed August 4,1993. The cost of the investigation was $47,873,400. (28) 8. James C. McKay (appointed February 2, 1987). Appointed to investigate allegationsconcerning former White House staffer Franklyn C. Nofziger and potential violations ofpost-employment "revolving door" conflicts of interest in relation to alleged "influence peddling"and lobbying activities performed for Wedtech Corporation. On May 11, 1987, Mr. McKay wasreferred the additional matter of Attorney General Edwin Meese's conduct concerning the WedtechCorporation, Mr. Meese's financial holdings and potential conflicts of interest, Mr. Meese'sinvolvement in the Aqaba Pipeline project and other matters. Independent Counsel concluded in aJuly 5, 1988, report that with respect to criminal conflicts of interest under 18 U.S.C. SS 208 and Mr.Meese's financial interests in the regional Bell companies, and with respect to filing materially falsetax returns, "in certain instances Mr. Meese's conduct probably violated the criminal law, but thatno prosecution is warranted"; and that with respect to bribery, illegal gratuities and the ForeignCorrupt Practices Act involving the Aqaba Pipeline, there is "insufficient evidence" to conclude thatMr. Meese violated the law. (29) Obtained conviction of Nofziger on February 11, 1988, on threecounts of a four count indictment. Conviction of Nofziger overturned on appeals on technical failureof pleadings in the original indictment. (30) Final report filed July 18, 1988. The cost of the investigationwas $2,796,000. (31) 9. James R. Harper , appointed August 17, 1987 to replace Carl S. Rauh (appointedDecember 19, 1986). The subject of the investigation was sealed. No indictments sought.Investigative report filed December 18, 1987. The cost of the investigation was $50,000. (32) 10. Sealed . Independent counsel appointed May 31, 1989. No indictments returned. Reportfiled August 23, 1989. Cost of the investigation: $15,000. (33) 11. Larry D. Thompson , appointed July 3, 1995 to replace Arlin M. Adams (appointedMarch 1, 1990). Appointed to investigate allegations of criminal conspiracy to defraud the UnitedStates (involving favoritism and payments made to officials to influence the award of grants andsubsidies in programs of the Department of Housing and Urban Development during the ReaganAdministration) by Samuel R. Pierce, former Secretary of the Department of Housing and UrbanDevelopment, and others. The Office of Independent Counsel announced on January 11, 1995 that no indictment wouldbe sought for former Secretary Pierce in light of the Secretary's admissions of mismanagement of,and responsibility for corruption at, the Department of Housing and Urban Development, his age,his deteriorating health, the lack of personal benefit to the Secretary or his family, and conflictingevidence of intent. (34) The results of independent counsels' investigations with respect to other persons were as follows:Carlos A. Figueroa, consultant, pleaded guilty to making false statements with intent to defraud inrelation to monies paid to HUD officials in exchange for influence in making HUD grants forModerate Rehabilitation subsidies; Joseph A. Straus, former special assistant to HUD SecretaryPierce from 1981 to 1983, pleaded guilty to conspiracy and cover up in the receipt of payments froma private developer in return for helping the developer obtain federal monies for rehabilitationprojects; J. Michael Queenan and Ronald L. Mahon, former HUD officials "who obtained ... federalHUD subsidies after they became developers," found guilty of bribery, conspiracy to commit briberyand money laundering (the money laundering charges were dismissed by the judge notwithstandingthe jury verdict); Catalina Vasquez Villalpando, United States Treasurer from 1989 to January 20,1993, pleaded guilty to obstruction of justice with respect to destruction of documents sought ininvestigation of former employer/firm and HUD grants; Deborah Gore Dean, former ExecutiveAssistant to HUD Secretary Pierce, was found guilty of conspiracy, receipt of illegal gratuities andperjury in relation to the favorable "allocat[ion of] HUD Moderate Rehabilitation funds toconsultants or developers" who provided favors to family or political associates; Thomas Demery,former HUD Assistant Secretary for Housing from 1986 to 1989, pleaded guilty to the acceptanceof illegal gratuities and obstruction of justice in receipt of things of value from developers; RobertB. Olsen, a state housing agency director, pleaded guilty to conspiracy and bribery in the receipt ofmoney in awarding of Moderate Rehabilitation funds to developers; Philip D. Winn, former HUDAssistant Secretary for Housing, 1981-1982, pleaded guilty on February 9, 1993, to conspiracycharges in relation to providing things of value to HUD officials because of their official actions;Leonard Briscoe, a private businessman and developer, Maurice Steier, an Omaha attorney, andLance H. Wilson, former executive assistant to then-HUD Secretary Pierce, were found guilty ofgiving or offering illegal gratuities to a HUD official, although Wilson's verdict was reversed onappeal on statute of limitations grounds; Elaine Richardson, former executive assistant to SenatorEdward Brooke, pleaded guilty to one count of aiding and abetting false statements to HUD madeby former Senator Brooke; Silvio J. DeBartolomeis, a former Deputy Assistant Secretary of HUD,pleaded guilty to conspiracy to make false statements, accepting an illegal supplementation of hisofficial income, and aiding and abetting in false statements to HUD; Benton Mortgage Company,Inc., pleaded guilty to three felony counts of concealing material facts concerning the payment ofconsultants in matters relating to HUD, and paid a criminal fine of $1,000,000; Samuel P. Singletarypleaded guilty to attempted tax evasion concerning funding from HUD received for a project underthe Secretary's Discretionary Fund; James G. Watt, former Secretary of the Interior, pleaded guiltyto attempting to influence a federal Grand Jury by writing a letter containing inaccurate information,in violation of 18 U.S.C. SS 1504; Victor R. Cruse, a former Connecticut housing official, indictedfor perjury and obstruction of justice, was acquitted by a jury of the charges. Philip D. Winn, the former HUD Assistant Secretary for Housing who had pleaded guilty onFebruary 9, 1993 to conspiracy charges, was pardoned by President Clinton on November 20, 2000. The final report of the independent counsel's office was released October 27, 1998. According to the General Accounting Office, the cost of the investigation was $29,417,318. (35) 12. Sealed. Appointed April 19, 1991. No indictments sought. Report filed July 15, 1992. Cost of investigation: $93,000. (36) 13. Michael F. Zeldin , on January 11, 1996, succeeded Joseph E. diGenova , who wasappointed on December 14, 1992, "to investigate whether Janet Mullins, Assistant to the Presidentfor Political Affairs, violated federal criminal law" with respect to the search of then presidentialcandidate Bill Clinton's passport files during the 1992 presidential campaign. Independent CounseldiGenova found "no evidence that would warrant criminal prosecution of anyone for any conductconnected with the search of William Clinton's passport files, the disclosure of information from thefiles, or the Inspector General's investigation of the search or disclosure," in the final investigativereport filed November 30, 1995. (37) According to reports by the Government Accountability Office,the cost of the investigation was $3,089,082. (38) 14. Julie F. Thomas , named on March 12, 2002 to succeed Robert W. Ray , who wasnamed on October 18, 1999 to succeed Independent Counsel Kenneth W. Starr . Mr. Starr had beenappointed on August 5, 1994 to continue the investigation of allegations commonly referred to as"Whitewater," begun by the Attorney General-appointed Special Counsel Robert B. Fiske, Jr.,regarding any possible violations of law relating in any way to President Clinton and the First LadyHillary Rodham Clinton's relationship with Madison Guarantee Savings and Loan Association, theWhitewater Development Corporation, or Capital Management Services, as well as any collateralmatters arising out of the investigation of such matters. The jurisdiction of Independent CounselStarr was expanded on March 22, 1996, at the request of Attorney General Reno, to look into mattersinvolving the firing of staff from the White House travel office, and on June 21, 1996 to investigateallegations concerning the misuse of confidential FBI files by White House staff. On October 25,1996 the jurisdiction was expanded to investigate possible false statements made by White HouseCounsel Bernard Nussbaum before the House Committee on Government Reform and Oversight. The jurisdiction was expanded again on January 16, 1998, at the independent counsel's request tothe Attorney General, to investigate allegations of subornation of perjury, obstruction of justice orintimidation of witnesses by former White House aide Monica Lewinsky, or others, concerning thecivil case involving the President, Jones v. Clinton . Results of the independent counsel investigations have included guilty pleas from David L.Hale, Charles Matthews, Eugene Fitzhugh, Robert W. Palmer, Webster L. Hubbell, ChristopherWade, Neal T. Ainley, Stephen A. Smith, Larry Kuca, William J. Marks, Sr., former ArkansasGovernor Jim Guy Tucker, and John Haley; and the convictions of James McDougal, SusanMcDougal and Jim Guy Tucker. Additional indictments obtained on April 30, 1998, of Webster L.Hubbell, Suzanna Hubbell, Michael C. Schaufele, and Charles C. Owen, relating to charges of failureto pay federal income taxes, which had been dismissed by a federal court finding the matter outsideof the jurisdiction of the independent counsel and, as to Mr. Hubbell specifically, a violation of theimmunity granted to him during an earlier investigation, were re-instated by the United States Courtof Appeals for the District of Columbia Circuit, on January 26, 1999. (39) On November 13, 1998,Independent Counsel Starr had obtained an additional 15-count indictment against Webster Hubbellalleging concealment and false statements made about the Rose law firm's involvement in land dealsin the 1980's in Arkansas. On June 30, 1999, Mr. Hubbell pleaded guilty to one misdemeanor chargeof tax evasion in the April 30, 1998 indictment, and pleaded guilty to one felony charge of falsestatements in the November 13, 1998 indictment. The charges against the other three individualsnamed in the April 30, 1998 indictment were dropped as part of the plea agreement. Other results of the independent counsel investigation have included the acquittal ofArkansas bankers Herbert Brancum and Robert Hill on four charges, and failure to reach a verdicton 7 others; the acquittal of Susan McDougal on April 12, 1999 on obstruction of justice chargesstemming from her refusal to testify before the grand jury, and the failure of the jury to reach averdict on the other two counts involving criminal contempt of court. Julie Hyatt Steele was indictedon January 7, 1999 for alleged perjury and obstruction of justice in the Monica Lewinskyinvestigation, and her trial ended in a mistrial being declared on May 7, 1999, as the jury failed toreach a verdict on the charges. Independent Counsel Starr issued a statement on May 25, 1999 thatneither Ms. Steele nor Ms. McDougal would be re-tried on the hung-jury counts. Upon the plea bargain with Webster L. Hubbell on June 30, 1999, it was reported in the pressthat Independent Counsel Starr told reporters that the "Whitewater aspect" of the investigation of theClintons was "concluded," indicating that no indictments of the President or the First Lady wouldbe forthcoming in the original "Whitewater" matter. (40) That was confirmed in a six-page statement issued on September20, 2000, by Independent Counsel Ray, that "the evidence was insufficient to prove to a jury beyonda reasonable doubt that either President or Mrs. Clinton knowingly participated in any criminalconduct involving Madison Guarantee, CMS, or Whitewater Development or knew of suchconduct." (41) Independent Counsel Ray issued two reports to the Special Division of the Court on March16, 2000, which were later released by the court. One report concerned the FBI file information ( InRe: Anthony Marceca ), where the independent counsel found "that neither Anthony Marceca nor anysenior White House official, or First Lady Hillary Rodham Clinton, engaged in criminal conduct toobtain through fraudulent means derogatory information about former White House staff." (42) In the other March 16,2000 report, concerning the testimony before Congress by White House official Bernard Nussbaum,the independent counsel "found no credible evidence that Mr. Nussbaum testified falsely...." (43) On June 22, 2000,Independent Counsel Ray announced that he would seek no criminal indictments for any conductby White House aide David Watkins, or First Lady Hillary Rodham Clinton, concerning the removalof employees in the White House travel office, and that a report on this matter was sent to the SpecialDivision of the United States Court of Appeals. (44) That report was released on October 18, 2000, finding that"insufficient evidence exists to establish criminal conduct beyond a reasonable doubt to a jury'ssatisfaction." (45) On Friday, January 19, 2001, on the final full-day of President Clinton's term, jointstatements were released announcing that Independent Counsel Ray would "decline prosecution" inthe Monica Lewinsky and Paula Jones-deposition matter in conjunction with the President'sadmission that he gave "evasive and misleading answers" in the Jones civil suit deposition and "thathis conduct was prejudicial to the administration of justice." (46) The Presidentacknowledged and apologized for his conduct in the Paula Jones deposition, and agreed to afive-year suspension of his law license and a $25,000 fine to cover the costs of proceedings in arelated, pending Arkansas Bar matter. (47) Four individuals who had entered guilty pleas or were found guilty of misconduct related tothe Arkansas "Whitewater" investigation, Robert W. Palmer, Christopher Wade, Stephen A. Smith,and Susan McDougal, were pardoned by President Clinton on January 20, 2001. In addition to litigation matters, Independent Counsel Starr submitted a report to the courtin July of 1997, which was released by the court on October 11, 1997, reaffirming the findings ofearlier investigations that White House aide Vincent Foster's death was a suicide; and forwarded onSeptember 11, 1998, a report and supporting evidentiary materials to the United States House ofRepresentatives, under authority of 28 U.S.C. SS 595 (c), concerning information "that may constitutegrounds for an impeachment" regarding President Clinton. Additional evidentiary material wasdelivered to the House of Representatives on November 13, 1998. According to reports by GAO, the cost of Independent Counsels Thomas', Ray's and Starr'sportion of the investigation, through September 30, 2005, has been $73,597,345. (48) In addition, GAO hasreported that Robert B. Fiske, Jr., spent $6,073,000, on the earlier "Whitewater" investigation priorto Mr. Starr's appointment. (49) 15. Donald C. Smaltz . Appointed September 9, 1994, to investigate any potential criminalconduct concerning allegations that Secretary of Agriculture Mike Espy received various gifts andentertainment from companies or organizations which are regulated by or have official business withthe Department of Agriculture. Results of the investigations have included guilty pleas from Mr. James Lake, lobbyist forSun-Diamond Growers; Brook Keith Mitchell, Sr., and Five M. Farming Enterprises; a plea of "nocontest" ( nolo contendere ) and the payment of a $2,000,000 fine from Crop Growers Corporation;guilty pleas from the firm of Ferrouillet & Ferrouillet, the Municipal Healthcare Cooperative, Inc.,and from Alverez Ferrouillet, concerning false statements in relation to a bank loan and in relationto the making of campaign contributions; the settlement of a conflict of interest civil suit, for$1,050,000, by Smith Barney Inc., in relation to the alleged arrangement by one of its employees topurchase a Super Bowl ticket for Secretary Espy relative to the interests of one of the firm's clients,Oglethorpe Power Corp. of Georgia; the settlement of a civil complaint and the payment of a$100,000 fine and costs of the investigation, against Robert Mondavi Corporation for activities inconnection with supplying gifts of free wine to former Secretary Espy; and a guilty plea by TysonsFoods, Inc., for providing gratuities to Secretary Espy and his girlfriend. Jury convictions have included those of Sun-Diamond Growers of California on eight of ninecharges relating to gratuities provided to Secretary Mike Espy and contributions to his brother HenryEspy. (The fraud and illegal campaign contribution counts in that case were affirmed, while theillegal gratuities convictions were reversed.) (50) Also convicted were John Hemmingson and Alverez Ferrouillet,Jr., in New Orleans for money laundering in relation to campaign contributions and the Secretary'sbrother; Ronald H. Blackley, formerly a chief of staff to Secretary Mike Espy at the Department ofAgriculture, who was convicted of lying to investigators concerning gifts and payments to him fromformer business associates regulated by the Department; (51) and Jack L. Williams, lobbyist for Tyson Foods, Inc., who wasfound guilty of false statements about alleged gifts from Tyson Foods, Inc. to Secretary Espy and hisgirlfriend, and not guilty on two illegal gratuity counts. The conviction of Richard Douglas, formerSenior Vice President of Sun-Diamond Growers, who was found guilty of providing gratuities toSecretary Espy (and was acquitted of other charges involving gratuities, mail fraud and illegalcampaign contributions), was set aside, and Mr. Douglas later pleaded guilty to a criminalinformation relating to false statements, on March 16, 1998. The conviction of Archibald R.Schaffer, under the provisions of the Meat Inspection Act for providing gifts to Secretary Espy,which had been set aside by the court on September 21, 1998, was reinstated on appeal when theappeals court reversed the trial court judge's ruling setting aside the jury's verdict. (52) Acquitted of charges have been John J. Hemmingson and Gary Black, former executives ofCrop Growers Corporation; Henry Espy, Jr., the brother of former Secretary Mike Espy, who wasfound not guilty of conspiracy and of concealing illegal campaign contributions; and Norris Faust,Jr., of the Farm Service Agency, acquitted of three counts of perjury. Former Secretary ofAgriculture Mike Espy, who had been indicted on 35 counts (1 had been dismissed) relating to thealleged acceptance of gifts and favors from private sources and attempts to deceive investigators, wasacquitted on all counts by a jury. (53) Several individuals who either pleaded guilty to or were found guilty by a jury of offensesin connection with this investigation, including James H. Lake, Brook K. Mitchell, Sr., JohnHemmingson, Alverez Ferrouillet, Jack L. Williams, and Richard Douglas, were pardoned byPresident Clinton on January 20, 2001. The final report of Independent Counsel Smaltz was filed on January 30, 2001, and publishedby the court on October 25, 2001. According to the reports by the General Accounting Office, thecost of the investigations of Independent Counsel Smaltz through September 30, 2005, has been$25,157,010. (54) 16. David M. Barrett . Appointed May 24, 1995, to investigate allegations pertaining to theDepartment of Housing and Urban Development Secretary Henry G. Cisneros and false statementsallegedly made to the FBI during a background check. Former Secretary Cisneros was indicted onDecember 11, 1997, along with Linda (Medlar) Jones, who had been alleged to have receivedpayments from Mr. Cisneros. Also indicted in this case were two former aides of Mr. Cisneros,Sylvia Arce-Garcia, and John D. Rosales. The independent counsel's office announced on July 12,1999, that all charges against Sylvia Arce-Garcia and John D. Rosales will be dropped. Ms.(Medlar) Jones, who had also been indicted earlier, in September of 1997, along with her sister andbrother-in-law, Patsy and Alan Wooten, on various charges including fraud, false statements, moneylaundering and conspiracy regarding the purchase of a house, pleaded guilty to 28 felony countsrelating to that transaction, allegedly financed by the money from Mr. Cisneros. Patsy and AlanWooten also entered guilty pleas. On September 7, 1999, Mr. Cisneros pleaded guilty to onemisdemeanor charge, and was fined $10,000. (55) Former Secretary Cisneros and Linda Jones were pardoned byPresident Clinton on January 20, 2001. The Special Division of the Court of Appeals decided on June 15, 2001, not to terminate theoffice of Independent Counsel Barrett, and on March 17, 2003, instructed the Independent Counselto continue the noninvestigative and nonprosecutorial tasks needed to conclude the functions of hisoffice. The final report was filed with the Special Division on August 13, 2004, and released to thepublic pursuant to court instructions on January 19, 2006. According to audit reports by theGovernment Accountability Office, the cost of the investigation through September 30, 2005, hasbeen $24,438,915. (56) 17. Daniel S. Pearson . Appointed July 6, 1995, as independent counsel to investigateallegations concerning financial dealings of Secretary of Commerce Ronald H. Brown. Investigationended upon death of Secretary Brown. Final report filed November 14, 1996. The cost of theinvestigation was $3,861,710. (57) 18. Curtis E. von Kann (formerly "Sealed -1996"). Appointed November 27, 1996, toinvestigate alleged conflict of interest law violations by former White House official Eli Segalconcerning fundraising for a non-profit organization. No indictments returned. The final report wasfiled August 21, 1997. The cost of investigation, including reimbursement of attorneys' fees, was$628,156. (58) 19. Carol Elder Bruce . Appointed March 19, 1998, to investigate allegations of falsestatements to Congress by Interior Secretary Bruce Babbitt concerning the rejection of a proposedIndian gambling casino in Wisconsin by the Department. Ms. Bruce announced on October 13,1999, that no criminal indictments will be sought in the matter, and the final report was filed onDecember 30, 1999, and published on August 22, 2000. Government Accountability Office reportsshow total expenditures of this investigation of $7,152,293. (59) 20. Ralph I. Lancaster . Appointed May 26, 1998, to investigate allegations of unlawfulsolicitation of campaign contributions by Secretary of Labor, Alexis Herman. According to pressreports, the only indictment in the investigation was of a Singapore businessman, Abdul Rahman,for illegal campaign contributions, but that he is physically outside of the jurisdiction of the UnitedStates. (60) Final reportwas submitted to the Special Division on April 7, 2000. According to GAO reports expendituresrelated to this investigation were $6,027,860. (61) *Costs are through September 30, 2005, as of GAO audit released March 31, 2006, GAO-06-485.

This report lists the independent counsels (called "special prosecutors" until 1983) appointedby the Special Division of the United States Court of Appeals upon application from the AttorneyGeneral of the United States, under the provisions of the law originally enacted in the Ethics inGovernment Act of 1978. The report specifies the dates of the appointments of the independentcounsels and the dates of their final reports; sets out in summary fashion the areas or subjects ofinvestigation by the independent counsels; highlights the results of those investigations; and providesthe costs of the investigations through September 30, 2005, the date through which the GovernmentAccountability Office has completed the latest published audit of the offices of independent counsels(published March 31, 2006). The information provided from public documents indicates that there have been 20 reportedindependent counsel or special prosecutor investigations initiated under the provisions of title VI ofthe Ethics in Government Act of 1978, as amended. Because Congress did not pass a reauthorizationof the law, the provisions of the independent counsel law expired under a five-year "sunset"provision on June 30, 1999, and independent counsels are no longer named by the Special Divisionof the Court. Investigations by independent counsels who had already been appointed before June30, 1999, however, were allowed to continue under the old provisions of the law until the mattersassigned to them had been completed (28 U.S.C. SS 599). Of the 20 independent counsel investigations, 12 of the investigations returned noindictments against those investigated. Of the eight investigations that did return at least oneindictment, in three of those instances, there was no indictment brought against the principalgovernment official originally named as the target of that independent counsel's investigation; inthree other instances, the principal government official indicted was either acquitted or hisconviction was overturned on appeal. Thus, of the 20 independent counsel investigations initiated,although several independent counsels obtained multiple convictions of certain persons relating tothe original subject matter or peripheral matters (including convictions of several federal officialsor former federal officials), only two federal officials who were actually the named or principalsubjects of the 20 investigations were finally convicted of or pleaded guilty to the charges brought;in one of those two instances, that person was pardoned by the President. According to reports from the Department of Justice concerning early "special prosecutor"and independent counsel investigations, and later published audits from the GovernmentAccountability Office, it is estimated that the total costs of all 20 independent counsel investigationsthrough September 30, 2005, including unaudited expenses of other agencies assisting theindependent counsels and the government-reimbursed costs of attorneys' fees when provided, hasbeen approximately $228,712,589.

Airships and aerostats have been used historically for military surveillance and anti-submarine warfare. Unlike fixed-wing aircraft or helicopters, aerostats and airships are "lighter-than-air (LTA)"; typically using helium to stay aloft. Airships are traditionally manned, and use engines to fly. Aerostats are tethered to the ground, by a cable that also provides power. As many as 32 companies are involved in the design or manufacture of more than 100 commercially available airships and aerostats in Europe, Asia, and North America. The Navy disbanded its last airship unit in 1962, and since then, military use of lighter-than-air platforms has been limited to Air Force custodianship of a dozen aerostats. However, a number of developments have combined to draw increased attention toward LTA platforms. First, U.S. aerospace dominance in military conflicts since 1991 has been overwhelming, making threats to LTA platforms appear to be very low by historical standards. Second, the military's demand for "persistent surveillance," a function for which aerostats appear to be well suited, is growing. Network-centric warfare approaches, increased emphasis on homeland security, and growing force protection demands in urban environments all call for "dominant battlespace awareness." Third, DOD's growing orientation toward expeditionary operations has spawned studies on using airships as heavy lift vehicles. Fourth, growing budget pressures have encouraged the study of potential solutions to military problems that may reduce both procurement and operations and maintenance spending. LTA platforms may fit into this category. Finally, recent advances in unmanned aerial vehicles suggests that future airships may also be remotely piloted, or fly autonomously. The most well established LTA platform today is the Tethered Aerostat Radar System (TARS) that has been operating since 1980 along the southern U.S. border and in the Caribbean. Currently, TARS' primary mission is surveillance for drug interdiction. Each aerostat can lift 2,200 lbs of sensors to a height of 12,000 feet, and can detect targets out to 230 miles. The aerostat can stay aloft for months. In response to ongoing threats to U.S. troops deployed to Afghanistan and Iraq, the Army has deployed small aerostats, equipped with ground surveillance sensors, to those countries. The Rapidly Elevated Aerostat Platform (REAP) was jointly developed by the Navy and the Army. This 25-foot long aerostat is much smaller than TARS, and operates at 300 feet above the battlefield. It is designed for rapid deployment and carries daytime and night vision cameras. The Army has also deployed a Rapid Aerostat Initial Development (RAID) system to Afghanistan, Iraq, and Kosovo. This aerostat is approximately twice the size of REAP and operates at approximately 1,000 feet. It also carries a suite of day and night cameras for force protection. The Marine Corps has begun training with RAID, which is a spinoff of a the Army's Joint Land Attack Cruise Missile Defense Elevated Netted Sensor System (JLENS) program. The Army is leading this joint program. JLENS seeks to use advanced sensor and networking technologies to conduct cruise missile defense. The initial JLENS system fielded (Block 1) will include two separate tethered aerostats. One will elevate a radar to conduct persistent surveillance of the battlespace. The second aerostat will elevate a radar to precisely track the cruise missile and guide an intercepting weapon. JLENS Block 2 will field two un-tethered lighter than air platform, and Block 3 will attempt to field both radars on a single un-tethered lighter than air platform. Approximately $432 million in R&D funds have been appropriated for the JLENS program from FY1996 to FY2006. DOD's FY2007 budget requests $264.5 million for JLENS RDT&E. The JLENS program projects $1.8 billion in spending through FY2011. JLENS is seen by some to be an important part of DOD's network-centric warfare approach, because it is the centerpiece of a larger attempt to seamlessly link together numerous sensors across services to build a "single integrated air picture" that will enable effective cruise missile defense. The Missile Defense Agency (MDA) is funding an effort to investigate the feasibility of a high altitude airship (HAA) for homeland defense. Like JLENS, HAA would be unmanned, and provide over-the-horizon surveillance. However, it would not provide fire control-quality tracks, and unlike an aerostat, HAA could move to avoid weather or change radar coverage. The HAA would operate at high altitudes and has been likened to a low flying, and relatively inexpensive satellite. This altitude might enable a small number of airships to surveill the entire United States. The HAA program seeks to demonstrate a prototype by 2010 that could fly for 30 days at a time. Goals are for $50 million airships capable of flying for one year at a time. A total $150.8 million has been provided thus far for HAA. For FY2007, House appropriators (Report 109-504, H.R. 5631 ) cut $20 million from MDA's $40.6 million HAA request (PE 0603175C), and senate appropriators cut $25 million (Report 109-232, H.R. 5631 ). Integrated Sensor is Structure (ISIS) .The goal of this Defense Advanced Research Projects Agency's (DARPA) program is to develop a stratospheric airship-based sensor that can remain airborne for years. It is hoped to detect both air and ground targets at long range. The ISIS program will develop technologies to enable large and lightweight radar antennas to be integrated into an airship platform. This approach exploits the platform's size and complies with the platform's weight and power limitations. Major technical challenges include developing ultra-lightweight antennas, antenna calibration technologies, power systems, and airships that support extremely large antennas. House appropriators fully funded ISIS' $16.3 million FY2007 funding request (PE0603287E), while Senate appropriators recommended cancelling the program. Until cancelled by congressional appropriators in FY2006, this DARPA program was developing a hybrid airship capable of transporting up to 1,000 tons across international distances. Unlike traditional, cigar-shaped airships, a hybrid airship is shaped more like an aircraft's wing, to generate lift through aerodynamic forces. Advocates hope that such airships may potentially be capable of carrying a complete Army brigade directly from "the fort to the fight," overcoming logistic choke points and mitigating the effects of limited forward basing. Airships and hybrids may be able to land on water, which could prove valuable to the Navy's sea basing concept. Independently funded hybrid airship programs exist, but with the demise of Walrus, their future is uncertain. Generally at issue is whether the operational need for airships and aerostats, and their ability to satisfy this need, outweigh the costs of developing and fielding them. The debate is perhaps most effectively engaged by dividing lighter-than-air platforms into three distinct categories: aerostats, high-altitude airships, heavy lift airships. The operational need for aerostats and their ability to satisfy this need appears the most mature of the three distinct lighter-than-air platforms. These systems are currently fielded and their capabilities and limitations appear well-documented. The role that they appear most suited for is persistent surveillance. Aerostats' primary advantages over other platforms capable of providing elevated, persistent surveillance (manned aircraft and UAVs) appear to be low life cycle cost and long dwell time. The primary operational concerns with employing aerostats appear to be vulnerability to weather and enemy ground fire. U.S. and foreign aerostats have been lost to severe weather, as have manned aircraft and UAVs. Aerostats tend not to fail in benign weather, however, while aircraft and UAVs, which are more complex and dynamic systems, suffer accidents caused by factors such as human error and mechanical failure. The vulnerability of aerostats to enemy ground fire is debated. Opponents argue that aerostats are big targets within range of many enemy weapons. Proponents argue that despite their large size, aerostats are survivable because of a low radar cross section and their ability to endure numerous punctures before gradually losing altitude. Low flying aircraft and UAVs are also vulnerable to enemy ground fire. For land-based applications, technology issues related to surveillance aerostats appear to pertain more to networking and exploiting their sensors than to the balloon itself. One non-traditional aerostat application that may warrant study is replacing, or augmenting, Navy E-2C Hawkeye surveillance aircraft with aerostats. Replacing a carrier air wing's 3-4 E-2Cs with a single or pair of aerostats could potentially improve surveillance by providing 24-hour coverage of the battle group, and could increase the wing's striking power by making room on the carrier for 6-8 more fighter aircraft. The operational need and utility of HAAs is less well understood than it is for aerostats. DOD, the Department of Homeland Security (DHS), and other agencies are likely to need considerable time and study to determine exactly what these platforms can do, how they might be exploited, and whether these concepts offer new capabilities. Long-range aerial surveillance, communications relay, Internet services relay, and laser weapon relay for missile defense, and forest fire warning are just some of the roles that HAA advocates would like examined. The HAA's potential operational environment and long endurance goals present technological challenges for HAAs that appear much greater than those experienced by aerostats. Because the atmosphere is very thin at 70,000 feet, it will require a very large volume of helium to sustain even modest payloads. It is estimated that the HAA ACTD's goal of a 500 lb payload will require an airship over 500 feet long and capable of holding over 5 million cubic feet of helium. This airship would be the largest of its kind attempted in the last 60 years. This payload constraint is likely to be a limiting factor for military applications. Some hope, for example, that HAA's could deploy very large sensor arrays that could use low frequency radar to detect small targets, like cruise missiles. However, large radars tend to be heavy. The radar that was being developed for the Air Force's now cancelled E-10A surveillance aircraft, for example, weighs 11,000 lbs. While producing 500 foot long airships is achievable, their handling characteristics may be challenging. Operating at high altitudes may be an "atmospheric sweet spot" for these large aerostats, but they still must successfully ascend and descend through relatively stormy altitudes. Operating these large airships for months or even years at a time may also prove a technological challenge. Many potential power sources, such as microwaves, are in their infancy, and weight and longevity will be at a premium. Equipment will have to be light, and energy efficient. Further, all systems on an HAA will require uncommon levels of reliability if they are to operate for months or years at a time with no maintenance. This high level of reliability will likely come at increased cost. A final issue pertains to schedule. MDA hopes to field a prototype by 2006 have already slipped to 2010, confirming the belief of many that this program's schedule is too aggressive. In February 2006, the Air Force Scientific Advisory Board also cast doubt on this schedule when it reported that long-endurance, fixed wing UAVs offer more promise than lighter-than-air vehicles in conducting surveillance from near-space altitudes. The Republic of Korea initiated a HAA program that spans 10 years of research and development. Considering this experience, has DOD established realistic timelines, milestones and budgets to solve technological challenges, mitigate risk, and field a useful HAA platform? Alternatively, has MDA established partnerships or other relationships with researchers in Korea and Japan which have been working on HAA concepts for over six years? Heavy lift airships may raise some questions regarding need and feasibility. Heavy lift airship advocates believe that these platforms can fill a void between sea lift ships that carry very large payloads slowly, and aircraft, which carry smaller loads quickly. Skeptics may argue that there may not be a void to be filled by airships, because the "transport momentum" (payload x speed x annual utilization) of both sealift ships and airlift aircraft are very effective, and these transport media complement each other well. Another claim by advocates that might invite study, is that heavy lift airships would require much less infrastructure than airlift aircraft. This may be true for conventional Airships, which don't need long runways, and can moor to simple and inexpensive structures. Because hybrid airships use aerodynamic lift, however, they will take-off and land much like conventional aircraft. Some estimate that 1,000 ton-class hybrid aircraft will require 5,000 foot-long runways. Along with loading, offloading equipment and facilities, these runways appear to constitute infrastructures like those required by conventional aircraft. An attendant issue for hybrid airships is one of safety. What happens when a 1,000 ton semi-rigid airship has an engine failure during takeoff? While the take off speed may not be great, the inertial forces of such a mass would be prodigious. When a conventional aircraft suffers from a mishap, it is towed from the runway and flight operations resume. It appears unlikely that a disabled 1,000 ton airship could be moved quickly, and the airstrip could be blocked indefinitely. Another issue that must be studied is how compatible 1,000 ton airships would be with DOD's distributed and "just in time" logistical concepts. Delivering a brigade-sized payload directly to a theater of conflict sounds attractive from a conventional wisdom point of view. But, large payloads take longer to consolidate, load, and unload than smaller payloads, and the their delivery must be tightly scheduled. Also, DOD operates on an all weather, day or night, 24/7 timetable. Airships will be more vulnerable to the effects of weather than are conventional aircraft. How severe, or how manageable is this shortcoming? How will an airship capable of lifting 1,000 tons of payload return to the United States once its cargo is offloaded? Would it require a very large ballast or a means of suppressing its buoyancy to be able to fly home? Vulnerability to attacks is another issue that may warrant study. Airships would fly at an altitude within reach of many surface-to-air weapons. LTA proponents say that airships have a small radar cross section and degrade gracefully if hit. This may be true for the balloon, but a brigade-worth of equipment would have a large radar cross section. Also, while the United States is relatively unchallenged in air-to-air combat, a 1,000 ton airship with a brigade-worth of equipment could constitute a very "high value" target for enemy aircraft. It is likely that DOD would find it prudent to protect these airships with fighters. How many fighters would be required and what would be the costs? A final issue that pertains to all of the LTA concepts addressed above is cost and budget. The life cycle costs for many unmanned LTA concepts could be notably less than manned aircraft, and satellites, and potentially UAVs. But can DOD find room in its budget for another procurement program? According to some, "a perennial issue in defense policy is whether future defense budgets will be large enough to finance all the weapon acquisition programs that are in the pipeline." This budget pressure, coupled with competition from a well established constituency for conventional aircraft, represent challenges to fielding LTA programs.

The Department of Defense (DOD) has a history of using lighter-than-air (LTA) platforms. Aerostats have recently been fielded to protect deployed U.S. troops. Contemporary interest is growing in using airships for numerous missions. This report examines the various concepts being considered and describes the issues for Congress. This report will be updated as events warrant.

Implementation of the Patient Protection and Affordable Care Act (Affordable Care Act, or ACA) is having a significan t impact on federal mandatory--also known as direct--spending. Most of the projected spending under the law is for expanding health insurance coverage. This includes premium tax credits and cost-sharing reduction payments for individuals and families who purchase private insurance coverage through the health insurance exchanges established under the ACA, as well as federal matching funds for states that choose to expand their Medicaid programs. The Internal Revenue Service (IRS) reports that spending on the premium tax credits and cost-sharing reductions totaled $79.2 billion for first three fiscal years (i.e., FY2014-FY2016) in which the ACA exchanges were operational. An analysis of preliminary data from the Medicaid Budget and Expenditure System (MBES) released by the Centers for Medicare and Medicaid Services (CMS) provides some insight into the initial impact of the Medicaid expansion on spending. For calendar year 2014, the 27 states that implemented the expansion reported spending a total of $36.7 billion on newly eligible adults, which under the ACA was paid for entirely with federal funds (i.e., 100% federal match). The same states spent an additional $10.5 billion on adults that were previously eligible at traditional federal match rates or subject to technical adjustments. Expenditures for these individuals were subject to a higher rate than the traditional match rate, but not 100%. In its March 2016 baseline budget projections, the Congressional Budget Office (CBO) estimates that gross spending on insurance coverage expansion under the ACA will total $1.938 trillion over the 10-year period FY2017 through FY2026. That total includes $866 billion on exchanges subsidies--premium tax credits and cost-sharing reductions--and related spending, and $1.063 trillion on Medicaid and the State Children's Health Insurance Program (CHIP). CBO projects that these costs will be offset by revenues from the ACA's taxes and fees, and by savings from the law's changes to the Medicare program that are designed to slow the rate of growth of Medicare payments to certain health care providers. The ACA also included numerous appropriations that are providing billions of dollars in mandatory funds to support new and existing grant programs and other activities. Several other provisions in the law require the Secretary of Health and Human Services (HHS) to transfer amounts from the Medicare Part A and Part B trust funds for specified purposes. This report summarizes all the mandatory appropriations and Medicare trust fund transfers in the ACA and provides details, where publicly available, on the status of obligation of these funds. The information is presented in two tables. The report also includes a brief discussion of the impact that sequestration is having on ACA mandatory spending. This report is periodically revised and updated to reflect important legislative and other developments. A companion CRS report discusses the ACA's impact on discretionary spending, which is controlled by the annual appropriations process. Discretionary spending under the ACA falls into two broad categories. First, there are the amounts provided in appropriations acts for specific grant and other programs pursuant to explicit authorizations of appropriations in the ACA. Second, there are the costs incurred by the federal agencies that are responsible for administering and enforcing the ACA's core provisions to expand insurance coverage. Table 2 summarizes all the ACA provisions that include an appropriation of funds or a transfer of amounts from the Medicare trust funds. The provisions are grouped under the following headings: (1) Private Health Insurance; (2) Medicaid and the State Children's Health Insurance Program (CHIP); (3) Medicare; (4) Fraud and Abuse; (5) Health Centers; (6) Health Workforce and the National Health Service Corps; (7) Community-Based Prevention and Wellness; (8) Maternal and Child Health; (9) Long-Term Care; (10) Comparative Effectiveness Research; (11) Biomedical Research; and (12) ACA Implementation: Administrative Expenses. Each table row provides information on a specific ACA provision, organized across four columns. The first column shows the ACA section or subsection number. The second column indicates whether the provision is freestanding (i.e., statutory authority that is not amending an existing statute) or amendatory (i.e., amends an existing statute, typically the Social Security Act). Amendatory provisions either add a new program to the statute or modify an existing one. The third column gives a brief description of the program or activity, including details of the appropriation or fund transfer. The entry also includes the name of the administering agency within HHS and, if applicable, the Catalog of Federal Domestic Assistance (CFDA) number for the grant program. The fourth column shows how much funding has been obligated to date. An agency incurs an obligation, for example, by placing an order, signing a contract, awarding a grant, purchasing a service, or taking other actions that require the government to make payments. The obligation amounts are based on information in the HHS Tracking Accountability in Government Grants System (TAGGS) unless specified otherwise. The TAGGS database is a central repository for grants awarded by all the HHS operating divisions (agencies) and several offices within the Office of the Secretary. It is updated daily with new data provided by these entities. In many instances the ACA provided annual appropriations of specified amounts for one or more fiscal years. Generally, these funds must be obligated during the fiscal year in which the funds become available for obligation. A few provisions are multiple-year appropriations , in which the amount appropriated is available for obligation for a period of time in excess of one fiscal year (e.g., for the period FY2011 through FY2014). Often the provision includes additional language stating that the funds are to remain available "until expended" or "without fiscal year limitation." Most ACA appropriations and fund transfers are temporary (i.e., time-limited). Often they end in FY2014 or FY2015, though in a handful of instances they extend until FY2019. The law included four provisions (i.e., Sections 3021(a), 3403, 10323(b), and 4002) that continue to provide annual or multiple-year appropriations in perpetuity. The ACA also included three indefinite appropriations that provide an unspecified amount of funding as indicated by the phrase "such sums as may be necessary," or SSAN. One such provision (i.e., Section 1311) appropriated SSAN and authorized the HHS Secretary to determine the specific amount necessary for the grant program. Table 3 provides additional details on each of the appropriations (and fund transfers) summarized in Table 2 . It shows the amount available for obligation in each fiscal year (or multi-year period) over the 10-year period FY2010 through FY2019. Note that the provisions are organized and grouped under the same headings used in Table 2 . The final column in Table 3 ("Total") shows for each provision the total amount of appropriations or fund transfers. Note that in several cases the total amount has yet to be determined (see table entries for Sections 1311, 3403, 6301(d) & (e), 9023(e), and 10323(a)). For three of the provisions that continue to provide funding beyond FY2019, the amount in the total column represents the cumulative amount appropriated through FY2019 (see table entries for Sections 3021(a), 4002, and 10323(b)). Unless otherwise stated, references to the Secretary in both tables refer to the HHS Secretary. A list of the federal laws, agencies, programs, and funds referred to in this report by their acronym is provided in Appendix A . As summarized in the tables, the ACA funded a broad range of new and existing programs. The law appropriated significant amounts to support the following short-term health care programs for targeted groups prior to the health insurance exchanges becoming operational in 2014: (1) $5 billion for the Pre-Existing Condition Insurance Plan (PCIP), a temporary insurance program that provided health insurance coverage for uninsured individuals with a pre-existing condition; (2) $5 billion for a temporary reinsurance program to reimburse employers for a portion of the costs of providing health benefits to early retirees aged 55-64; and (3) $6 billion for the Consumer Operated and Oriented Plan (CO-OP) program, to support temporary health insurance cooperatives. The ACA appropriated $2.4 billion for maternal and child health programs and provided an unspecified amount of funding for state grants to plan and establish health insurance exchanges. The law established the Center for Medicare and Medicaid Innovation (CMMI) within CMS and appropriated $10 billion for the FY2011-FY2019 period--and $10 billion for each subsequent 10-year period--for CMMI to test and implement innovative payment and service delivery models. It also established and funded an Independent Payment Advisory Board (IPAB) to make recommendations to Congress for achieving specific Medicare spending reductions if costs exceed a target growth rate. IPAB's recommendations are to take effect unless Congress overrides them, in which case Congress would be responsible for achieving the same level of savings. The ACA created four special funds and appropriated substantial amounts to each one: The Community Health Center Fund (CHCF) , to which the ACA appropriated a total of $11 billion in annual appropriations over the five-year period FY2011-FY2015, has helped support the federal health centers program and the National Health Service Corps (NHSC). (Note: A separate ACA appropriation provided $1.5 billion for health center construction and renovation.) Congress has since appropriated two additional years of funding for the CHCF (see below). While CHCF funding may have been intended to supplement annual discretionary appropriations for the health centers program and the NHSC, the funds have partially supplanted (i.e., replaced) discretionary health center funding and have become the sole source of funding for the NHSC program, which has not received an annual discretionary appropriation since FY2011. The Prevention and Public Health Fund (PPHF) , for which the ACA provided a permanent annual appropriation, is intended to support prevention, wellness, and other public health-related programs and activities authorized under the Public Health Service Act (PHSA). In two separate legislative actions, Congress has reduced the ACA's annual appropriation to the PPHF for each of FY2013 through FY2024 by a total of $9.75 billion. PPHF funds have been used to support several new discretionary grant programs authorized by the ACA. The funds are also supplementing, and in some cases supplanting, annual discretionary appropriations for a number of established programs, including ones that were reauthorized by the ACA. In FY2013, almost half of the PPHF funds were used to help pay for CMS's administrative costs associated with exchange operations. The Patient-Centered Outcomes Research Trust Fund (PCORTF) is supporting comparative effectiveness research with a mix of annual appropriations--some of which are offset by revenues from a fee imposed on private health plans--and transfers from the Medicare Part A and Part B trust funds through FY2019. The Health Insurance Reform Implementation Fund (HIRIF) , to which the ACA appropriated $1 billion, has helped cover the administrative costs of implementing the law. As already noted, most of the ACA appropriations are temporary. The following laws enacted since 2012 have extended funding for several programs funded by the ACA: American Taxpayer Relief Act of 2012 (ATRA); Pathway for SGR Reform Act of 2013 (PSGRRA); Protecting Access to Medicare Act of 2014 (PAMA); and Medicare Access and CHIP Reauthorization Act of 2015. Lawmakers opposed to specific ACA provisions also have succeeded in getting some ACA funding reduced or rescinded. ATRA, the Middle Class Tax Relief and Job Creation Act of 2012, the 21 st Century Cures Act, and enacted appropriations acts for each of the past six fiscal years (i.e., FY2011-FY2016) all included ACA funding reductions or rescissions. The ACA funding extensions, reductions, and rescissions are summarized in Table 2 and Table 3 . While the federal spending on insurance expansion coverage under the ACA is almost entirely exempt from annual sequestration, the ACA appropriations discussed in this report are, in general, fully sequestrable at the percentage rate applicable to nonexempt nondefense mandatory spending (see Table 1 ). Under the sequestration general rules, cuts in CHCF funding for community health centers and migrant health centers are capped at 2%. See Appendix B for more background on the annual spending reductions triggered by the Budget Control Act of 2011. Importantly, only new budget authority for nondefense programs is sequestrable in any given fiscal year. That includes advance appropriations that first become available for obligation in that year. Unobligated balances carried over from previous fiscal years are exempt from sequestration. Overall, the ACA provided more than $100 billion in mandatory appropriations and Medicare fund transfers over the 10-year period FY2010-FY2019. As enacted, the law included the following amounts: $40 billion for CHIP (FY2014 and FY2015); $15 billion for the PPHF through FY2019 (and $2 billion for each year thereafter); $11 billion for the CHCF; $10 billion for CMMI through FY2019 (and $10 billion for each 10-year period thereafter); $6 billion for the CO-OP program; $5 billion for PCIP; $5 billion for the Early Retiree Reinsurance program $4 billion (projected) for the PCORTF; $2.25 billion for the Medicaid Money Follows the Person (MFP) demonstration; and $1.5 billion for the maternal, infant, and early childhood visitation program. Only four of the ACA appropriations are permanent (i.e., CMMI, IPAB, PPHF, and environmental health screening). All the other appropriations were temporary. In a series of legislative actions (described in more detail in Table 2 and Table 3 ), Congress extended funding for several programs whose ACA appropriations were about to expire. The following programs are now funded through FY2017: health centers (CHCF funding); National Health Service Corps (CHCF funding); graduate medical education (GME) payments for teaching health centers; maternal, infant, and early childhood home visiting program; personal responsibility education program (PREP); health workforce demonstration programs; abstinence education grants; family-to-family health information centers; and outreach and assistance for low-income programs. Congress has also provided two more years of funding (FY2016-FY2017) for CHIP. Finally, Congress has partially reduced or rescinded ACA funding for IPAB, PPHF, and the CO-OP program. Appendix A. Acronyms Used in the Report The following laws, agencies, programs, and funds are referred to in this report by their acronym. Appendix B. Annual Spending Reductions Under the Budget Control Act The Budget Control Act of 2011 (BCA) amended the Balanced Budget and Emergency Deficit Control Act of 1985 (BBEDCA) by establishing two budget enforcement mechanisms to reduce federal spending by at least $2.1 trillion over the 10-year period FY2012 through FY2021. First, the BCA established enforceable discretionary spending limits, or caps, for defense and nondefense spending for each of those years. Second, the BCA created a Joint Committee on Deficit Reduction to develop legislation to further limit federal spending. The failure of the Joint Committee to agree on deficit-reduction legislation triggered automatic annual spending reductions for each of FY2013 through FY2021. The BCA specified that a total of $109 billion must be cut each year from nonexempt budget accounts. That amount is equally divided between the categories of defense and nondefense spending. Within each category, the spending cuts are allocated proportionately to discretionary spending and nonexempt mandatory (i.e., direct) spending. Under the BCA, the spending reductions are achieved through two methods: (1) sequestration (i.e., an across-the-board cancellation of budgetary resources); and (2) lowering the BCA-imposed discretionary spending caps. The BCA requires that the mandatory spending reductions in each category--defense and nondefense--must be executed in each of FY2013 through FY2021 by a sequestration of all nonexempt accounts, subject to the BBEDCA sequestration rules. Discretionary spending in each category is also subject to sequestration, but only in FY2013. For each of the remaining fiscal years (i.e., FY2014 through FY2021), discretionary spending reductions are to be achieved by lowering the discretionary spending caps for defense and nondefense spending by the total dollar amount of the required reduction. Thus, congressional appropriators get to decide how to apportion the cuts within the lowered spending caps rather than having the cuts applied across-the-board to all nonexempt discretionary spending accounts through sequestration. The Office of Management and Budget (OMB) is responsible for calculating the percentages and amounts by which mandatory and discretionary spending are required to be reduced each year, and for applying the BBEDCA's sequestration exemptions and rules. Congress has amended the BCA several times since its enactment in 2011. The American Taxpayer Relief Act of 2012 (ATRA) revised the discretionary spending caps for FY2013 and FY2014 and reduced the overall dollar amount that needed to be sequestered from FY2013 mandatory defense and nondefense spending. The Bipartisan Budget Act of 2013 established new discretionary spending caps for FY2014 and FY2015 and eliminated the requirement for these caps to be lowered. It also extended the sequestration of mandatory spending in the defense and nondefense categories for two additional years--FY2022 and FY2023--and specified that the percentage reduction calculated for FY2021 be applied to both those years. A provision in a 2014 law on military retirement pay extended the sequestration of mandatory spending to include FY2024 and, again, specified that the percentage reduction calculated for FY2021 be applied to that additional year. The Bipartisan Budget Act of 2015 established new discretionary spending caps for FY2016 and FY2017 and eliminated the requirement for these caps to be lowered. It further extended the sequestration of mandatory spending to include FY2025, once again using the percentage reduction calculated for FY2021.

Implementation of the Patient Protection and Affordable Care Act (Affordable Care Act, or ACA) is having a significant impact on federal mandatory--also known as direct--spending. Most of the projected spending under the law is for expanding health insurance coverage. This spending includes premium tax credits and other subsidies for individuals and families that purchase private insurance coverage through the health insurance exchanges established under the ACA, as well as federal matching funds for states that have expanded their Medicaid programs. In addition, the ACA included numerous appropriations that have provided billions of dollars in mandatory funds to support new and existing grant programs and other activities. Other ACA provisions require the Secretary of Health and Human Services (HHS) to transfer amounts from the Medicare Part A and Part B trust funds for specified purposes. The law appropriated significant amounts to support short-term health care programs for targeted groups prior to the health insurance exchanges becoming operational in 2014. It also created a Center for Medicare and Medicaid Innovation (CMMI) within the Centers for Medicare and Medicaid Services (CMS) and appropriated $10 billion for the FY2011-FY2019 period--and $10 billion for each subsequent 10-year period--for CMMI to test and implement innovative payment and service delivery models. The ACA established four special funds and appropriated substantial amounts to each one. First, the Community Health Center Fund, to which the ACA appropriated a total of $11 billion over the five-year period FY2011-FY2015, has helped support the federal health centers program and the National Health Service Corps. Second, the Prevention and Public Health Fund, for which the ACA provided a permanent annual appropriation, is supporting prevention, wellness, and other programs authorized under the Public Health Service Act. Third, the Patient-Centered Outcomes Research Trust Fund is supporting comparative effectiveness research through FY2019 with a mix of annual appropriations, fees assessed on private health insurance, and Medicare trust fund transfers. Finally, the Health Insurance Reform Implementation Fund, to which the ACA appropriated $1 billion, helped pay for implementing the law. Overall, the ACA included more than $100 billion in appropriations over the 10-year period FY2010-FY2019, including $40 billion to fund the State Children's Health Insurance Program (CHIP) for FY2014 and FY2015. In subsequent legislative actions, Congress has extended funding through FY2017 for several programs whose ACA appropriations were about to expire, and reduced or rescinded ACA funding other some other activities. Federal outlays on insurance expansion coverage under the ACA, which constitutes most of the law's mandatory spending, are almost entirely exempt from sequestration. However, the mandatory appropriations in the ACA are, in general, fully sequestrable at the percentage rate applicable to nonexempt nondefense mandatory spending. Besides the mandatory appropriations discussed in this report, the ACA also is having an effect on federal discretionary spending, which is controlled by the annual appropriations acts. A companion report, CRS Report R41390, Discretionary Spending Under the Affordable Care Act (ACA), discusses the law's impact on discretionary spending.

On November 13, 2007, the President signed the FY2008 Department of Defense Appropriations ( P.L. 110-116 ) into law, which included not less than $8 million for Department of Defense global HIV/AIDS activities. On December 26, 2007, the President signed the FY2008 Consolidated Appropriations into law ( P.L. 110-161 ), which includes the State/Foreign Operations and Labor/HHS appropriations. The act includes $6.3 billion for global HIV/AIDS, tuberculosis (TB), and malaria initiatives, of which $5.8 billion is appropriated to international HIV/AIDS initiatives, including $840.3 million for U.S. contributions to the Global Fund to Fight HIV/AIDS, TB, and Malaria. Congress exceeded the President's FY2008 request for global HIV/AIDS, TB, and malaria programs by $570.1 million (most of which was provided to the Global Fund) and by $4.7 billion for PEPFAR's entire five-year term. It is estimated that HIV/AIDS, TB, and malaria together kill more than 6 million people each year. According to the Joint United Nations Program on HIV/AIDS (UNAIDS), at the end of 2007, an estimated 33.2 million people were living with HIV/AIDS, of whom 2.5 million were newly infected, and 2.1 million died in the course of that year. More than two million of those living with HIV/AIDS at the end of 2007 were children and some 330,000 of those who died of AIDS that year were under 15 years old. Nearly 90% of all children infected with HIV reside in sub-Saharan Africa, which is home to 2.2 million of the estimated 2.5 million children living with HIV worldwide. On each day of 2007, some 1,000 children worldwide became newly infected with HIV, due in large part to little access to drugs that prevent the transmission of HIV from mother to child. An estimated 9% of pregnant women in low-and middle-income countries were offered services to prevent HIV transmission to their newborns. The World Health Organization (WHO) estimates that at the end of 2004, more than 14 million people were infected with TB, of whom almost 9 million were newly infected. More than 80% of those living with TB in 2004 were in southeast Asia and sub-Saharan Africa, with the greatest per capita rate found in Africa. According to WHO, each year there are about 300 million acute malaria cases, which cause more than one million deaths annually; in 2004, the disease killed about 2 million people. Health experts believe that between 85% and 90% of malaria deaths occur in Africa, mostly among children, killing an African child every 30 seconds. Appropriations for combating the global spread of HIV/AIDS have grown considerably since President Bush entered office. U.S. contributions to the Global Fund and the launching of two initiatives--the Prevention of Mother and Child Transmission Initiative and the President's Emergency Plan for AIDS Relief (PEPFAR)--have contributed to this growth. In FY2002, the President requested that Congress provide $500 million to fund a new initiative he called the International Mother and Child HIV Prevention Initiative. The Initiative sought to prevent the transmission of HIV from mothers to infants and to improve health care delivery in Africa and the Caribbean. Congress provided that up to $100 million (excluding rescissions) be made available to USAID for the initiative in FY2003. In FY2004, Congress provided $150 million (excluding rescissions) to CDC for PMTCT programs. Conferees also expressed an expectation that $150 million would be made available for the initiative from the newly established Global HIV/AIDS Initiative (GHAI; H.Rept. 108-401 ). Since the initiative expired in FY2004, Congress has included funds for PMTCT programs in the GHAI account. On January 28, 2003, during his State of the Union Address, President Bush proposed that the United States spend $15 billion over the next five fiscal years to combat HIV/AIDS through PEPFAR. The President proposed channeling $10 billion to prevention, treatment, and care services in the 15 Focus Countries through GHAI, $4 billion to existing bilateral HIV/AIDS, TB, and malaria programs and research conducted in more than 100 non-Focus Countries, and $1 billion to the Global Fund. In May 2003, Congress authorized sufficient funds to support the initiative through P.L. 108-25 , the U.S. Leadership Against HIV/AIDS, Tuberculosis, and Malaria Act (the Leadership Act). Between FY2004 and FY2008, PEPFAR programs aim to support care for 10 million HIV-affected people, including children orphaned by AIDS; support the prevention of 7 million new HIV infections; and help 2 million people receive ARVs. Congress appropriates the bulk of PEPFAR funds to the GHAI account. The account was established to streamline funds for global HIV/AIDS, TB, and malaria programs to the 15 Focus Countries. The Office of the Global AIDS Coordinator (OGAC) at the U.S. Department of State transfers funds from GHAI to implementing agencies and departments. The funds that Congress appropriates directly to U.S. agencies and departments are utilized in the non-Focus Countries. U.S. agencies and departments might also allocate additional resources to international HIV/AIDS, TB, and malaria programs not funded through PEPFAR. In each fiscal year since PEPFAR was launched, appropriators have included a chart in the foreign operations appropriations conference reports that itemizes how global HIV/AIDS, TB, and malaria funds are authorized to be spent ( Table 1 ). Press accounts of U.S. global HIV/AIDS spending are usually derived from this chart, though it does not include all U.S. global HIV/AIDS, TB, and malaria support. In January 2002, the Global Fund was established in Geneva, Switzerland. The Fund provides grants to developing countries aimed at reducing the number of HIV, TB, and malaria infections, as well as the other illnesses and deaths that result from such infections. The Fund is an independent foundation led by a board of directors comprised of representatives from seven donor countries and seven developing countries. In an effort to include all major stakeholders, each of the following communities also has one representative on the board: developed country non-governmental organizations (NGOs), developing country NGOs, the business community, private foundations, and people living with HIV/AIDS, tuberculosis or malaria. The Fund projects that by 2007, the grants it has approved will have provided treatment for 1.8 million HIV-positive people, 5 million people infected with TB, and 145 million malaria patients; prevented the spread of HIV to 52 million people through voluntary HIV counseling and testing services; financed the purchase and distribution of 109 million insecticide-treated bed nets to prevent the spread of the malaria; and supported care for 1 million orphans. Although there appears to be strong support for the Global Fund, Congress has placed restrictions on U.S. contributions to the Fund for various reasons. In FY2006, due to concerns about the Fund's spending practices, Congress required that 20% of U.S. contributions to the Fund be withheld until the Secretary of State certified that the Fund had undertaken a number of steps to strengthen oversight and spending practices ( P.L. 109-102 ). The act allowed the Secretary to waive the requirement if she determined that a waiver was important to U.S. national interest. Similar language has been included in subsequent appropriations legislation. In FY2008, the President proposed that the United States contribute $300 million to the Global Fund through Labor/HHS Appropriations. Congress provided that amount through Labor/HHS Appropriations (excluding rescissions) and appropriated an additional $550 million through Foreign Operations Appropriations (excluding rescissions). After deducting rescissions, in FY2008, Congress provided a total of $840.3 million; since PEPFAR was launched in FY2004, appropriators provided about $3 billion, and nearly $3.8 billion since making the first appropriation in FY2001 ( Table 2 ). According to the Global Fund's website, the organization has approved proposals totaling $10 billion and disbursed about half of those funds. The funds have been used to support ARV treatment for an estimated 1.4 million people (about 75% of whom were in Africa), treatment for almost 3 million people infected with TB, and distribution of some 30 million insecticide-treated bed nets to prevent malaria transmission. In June 2005, President Bush launched the President's Malaria Initiative (PMI), a plan to increase support for U.S. international malaria programs by more than $1.2 billion between FY2006 and FY2010 in 15 countries. Since launching PMI, the Administration has requested that all support for bilateral malaria efforts be provided to the U.S. Agency for International Development (USAID) as the coordinating agency for the initiative. When the Administration shifted leadership for bilateral malaria programs to USAID in FY2005, it determined that OGAC would no longer include malaria spending in its annual reports to Congress and that budgetary requests for the disease would be made separately from HIV/AIDS and TB requests. For comparability, and because P.L. 108-25 considers efforts to combat malaria as a critical part of PEPFAR, Table 1 includes appropriations to malaria programs. In FY2006 and FY2007, appropriators provided $102 million and $248 million for bilateral malaria efforts, respectively. According to the PMI website, in FY2006, $30 million of the $99 million that USAID spent on malaria programs was allocated to PMI, and an estimated $135 million was spent on the initiative in FY2007. The Administration requested $387.5 million for malaria initiatives in FY2008, of which $300 million would be for PMI; Congress appropriated $347.2 million to USAID and $36.0 million to CDC for international malaria efforts. According to a December 2007 press release, through September 30, 2007, PEPFAR has supported the provision of anti-retroviral treatment for approximately 1.4 million people; prevention of mother-to-child HIV transmission services for women during more than 10 million pregnancies and an estimated 152,000 infant infections; care for nearly 6.7 million people, including more than 2.7 million orphans and vulnerable children; and counseling and testing services for over 30 million people. Lines 1 and 2 refer to USAID's bilateral HIV/AIDS and TB programs in the non-Focus Countries, which are funded through a number of accounts, including the Child Survival and Health Account (CSH), Economic Support Fund aid (ESF), Assistance for the former Soviet Union under the Freedom Support Act (FSA), Assistance for Eastern Europe and the Baltics (SEED), and food aid. Line 3 refers to funds provided to USAID from all accounts for its bilateral malaria programs, including the President's Malaria Initiative (see above). Line 4 refers to contributions to the Global Fund provided through USAID accounts. In FY2004, $87.8 million of the amount appropriated to the Global Fund was withheld per legislative provisions limiting U.S. Global Fund contributions to 33% of the amount contributed by all donors, as indicated in Line 5 . P.L. 108-447 , FY2005 Consolidated Appropriations, directed that these withheld funds be transferred to the Global Fund in FY2005, subject, like the remainder of the U.S. contribution, to the 33% proviso. Congress provides funds for PEPFAR's 15 Focus Countries to the State Department's Global HIV/AIDS Initiative (GHAI), as indicated in Line 6 . U.S. contributions to other global AIDS efforts, such as international microbicide research, the International AIDS Vaccine Initiative (IAVI), and the United Nations Joint Program on HIV/AIDS (UNAIDS), are also provided through GHAI. GHAI Funds transferred to the Global Fund are reflected in Line 7 . Line 8 refers to funds appropriated to the Foreign Military Financing (FMF) account for equipment purchases that support the DoD's global HIV/AIDS efforts. DoD's bilateral HIV/AIDS programs, referred to in Line 15 , offer HIV/AIDS prevention education, primarily to African armed forces. Line 10 refers to the Centers for Disease Control and Prevention's (CDC) Global AIDS Program (GAP). CDC spends additional funds on international HIV/AIDS, TB, and malaria activities that are not earmarked by Congress, though they are included in the table ( Lines 11 - Lines 13 ). Line 14 reflects grants provided by the National Institutes of Health (NIH) for international HIV/AIDS research, which focus primarily on the development of an AIDS vaccine. NIH also transfers funds to the Global Fund, as indicated on Line 15 . The Administration has not requested funds for the Department of Labor's Global AIDS in the Workplace Initiative since FY2002 ( Line 16 ). Congress funded the initiative, however, until FY2006. The Department received additional funds from GHAI in support of its HIV/AIDS programs. In FY2008, the Administration did not request funds to support DoD's bilateral HIV/AIDS prevention programs, as indicated in Line 18 . Congress provided $8.0 million, however, for the activities.

On January 28, 2003, during his State of the Union Address, President George Bush proposed that the United States spend $15 billion over five years to combat HIV/AIDS, tuberculosis (TB), and malaria through the President's Emergency Plan for AIDS Relief (PEPFAR). The President proposed that most of the spending on PEPFAR programs be concentrated in 15 countries. Of the $15 billion, the President suggested spending $9 billion on prevention, treatment, and care services in the 15 Focus Countries, where the Administration estimated 50% of all HIV-positive people lived. The President also proposed that $5 billion of the funds be spent on existing bilateral HIV/AIDS, TB, and malaria programs and research, and $1 billion of PEFPAR funds be reserved for U.S. contributions to the Global Fund to Fight AIDS, Tuberculosis, and Malaria (Global Fund). Between FY2004 and FY2008, PEPFAR aims to have supported care for 10 million people affected by HIV/AIDS, including children orphaned by AIDS; prevented 7 million new HIV infections; and supported efforts to provide anti-retroviral medication (ARV) to 2 million HIV-infected people. From FY2004 through FY2008 Congress provided almost $20 billion to fighting the global spread of HIV/AIDS, TB, and malaria, some $5 billion more than the President proposed. The President's FY2008 budget request included about $5.8 billion for global HIV/AIDS, TB, and malaria efforts. The Administration proposed that the bulk of the funds, about $5.0 billion, be provided through Foreign Operations appropriations and that about $800 million be provided through Labor/HHS appropriations, of which $300 million would be reserved for a U.S. contribution to the Global Fund. Congress exceeded the President's request by some $560 million, providing $6.3 billion for global HIV/AIDS, TB, and malaria efforts, including some $840 million for a U.S. contribution to the Global Fund. This report reviews U.S. appropriations for treatment and prevention of the three diseases from FY2004 through FY2008. The report will not be updated; PEPFAR authorization expires in FY2008. Subsequent reports will analyze additional funding should the initiative be reauthorized.

Leadership transition . North Korea's power centers appear to be consolidating around Kim Jong-un, at least as the country's nominal leader. The most tangible sign of this occurred on December 30, when a key organ of the Communist Party (officially the Workers' Party of Korea, or WPK) met and selected Kim as "Supreme Commander" of the North Korean military (officially, the Korean People's Army, or KPA). Although North Korean propaganda outlets have been routinely referring to Kim Jong-un as "supreme leader" since Kim Jong-il died, this move by the WPK was the first actual position to be bestowed upon the younger Kim since. For the future, an indicator North Korea experts are watching is whether Kim Jong-un is named to other key positions, particularly Chairman of the National Defense Commission and/or General Secretary of the WPK Secretariat. Kim Jong-il held both titles, and used the National Defense Commission as his institutional base of power. North Korea's diplomacy. In the weeks since Kim Jong-il's death, North Korean government organs and propaganda outlets have issued harsh rhetorical volleys at South Korea, which have been based upon the South Korean government's allegedly disrespectful reaction to Kim Jong-il's death. South Korean President Lee Myung-bak's government issued a statement expressing its "its sympathy to the people of North Korea," but neither sent an official delegation to Pyongyang nor conveyed official condolences to the Kim family. Also, the North Korean government objected to Lee's prohibition on virtually all South Koreans from traveling to Pyongyang to pay their respects. On this pretext, the North Korean agency for handling relations with Seoul declared that in the future, "there is nothing to expect from the inter-Korean relations" and "there is no reason for us to say anything" to the Lee government during the remaining thirteen months of Lee's term. North Korea has issued similar statements in the past, only to re-engage in inter-Korean talks later. In statements regarding the United States, North Korea has appeared to take a rhetorically more confrontational stance than in the weeks before Kim Jong-il's death. For instance, the annual New Year's message of January 1, 2012, for the first time in four years emphasized the government's demand that U.S. troops withdraw from South Korea. Also, on January 11, the North Korean official media criticized the United States for "politicizing" bilateral negotiations over food aid by allegedly insisting that food be given only if North Korea agrees to concessions on its nuclear program. Regional diplomacy . In a sign of the dialogue occurring among the various powers in Northeast Asia, U.S. Assistant Secretary of State for East Asia Kurt Campbell visited Beijing, Seoul, and Tokyo in from January 3-7. He told reporters in Tokyo that he had made clear the U.S. position "that North Korea must refrain from any acts that could create a disturbance on the Korean Pensinsula." He added that, "we've particularly passed that message directly to our senior Chinese interlocutors." South Korean President Lee Myung-bak traveled to Beijing for a January 9-11 state visit. At the end of the South Korean leader's visit to China, the two sides issues a joint press communique in which they pledged their commitment to maintaining peace and stability on the Korean peninsula, and to working with the international community to create conditions for resumption of the Six-Party Talks. One notable feature of official U.S. and South Korean reactions to Kim Jong-il's death is the extent to which both governments have publicly stated their desire for North Korea to remain stable. Instability in North Korea would pose a number of challenges and possibly threats to the United States, South Korea, and the region. Perhaps the most worrisome are the possibilities that controls over North Korea's nuclear materials might loosen, that a weak leadership in Pyongyang could lash out militarily, and that a power vacuum could suck U.S., South Korean, and Chinese military forces into North Korea. In the coming months, both stabilizing and destabilizing dynamics will be operating simultaneously inside North Korea. It is likely that that cohesive tendencies will predominate in the short run, as members of the ruling elite rally around Kim Jong-un, as has been seen by members of the ruling elite paying their respects to the new ruler in the days since his father's death. In particular, most analysts expect that the regime collective will strive to maintain unity at least until April 2012, when the country is planning to celebrate the 100 th anniversary of the birth of founder Kim Il-Sung. However, over time, few would be surprised if tensions were to mount among the power centers of the North Korean system. Kim Jong-il's death, which officially occurred on December 17, has long been high on most North Korea-watchers' lists of events that could trigger the collapse of the North Korean regime. The untested Kim Jong-un, who is thought to be in his late 20s, has had less than two years to consolidate his power base, in contrast to the more than two decades of on-the-job training his father enjoyed before he became the country's supreme leader in 1994. Perhaps most importantly, while almost nothing is known about the younger Kim, it is believed that he has only weak ties to and authority over the Korean People's Army (KPA, as the North Korean military is known), arguably the country's most important center of power. Indeed, some speculate that Kim's presumed domestic weakness could lead North Korea to launch a small-scale military provocation, such as a third nuclear test, in 2012 as a way to bolster his leadership. Moreover, ruling North Korea today is far more complex than is was during the country's last leadership transition in 1994, upon the death of Kim Jong-il's father, the country's founder and "Great Leader" Kim il-Sung. Two decades of chronic food shortages--which peaked in the famine of the late 1990s that killed between 5%-10% of the country's approximately 22 million people--have caused the breakdown of the state-run distribution system and the emergence of official and clandestine markets, as ordinary North Koreans have had to fend for themselves to feed their families. More North Koreans are exposed to the outside world than ever before. Some venture back and forth into China, own cell phones, have access to foreign radio and television broadcasts, and are able to purchase foreign products. The police state has become highly corruptible, and access to foreign exchange has become a new path to power and protection. The "Great Successor," as Kim Jong-un has been dubbed by the official North Korean media, has had little time to gain experience managing various personal and group interests that have proliferated among the North Korean elite. Many North Korea experts will be watching for signs that these groups and individuals--including one or both of Kim Jong-un's older brothers--are maneuvering to assert themselves and their interests. Despite the array of challenges, there are several forces that are likely to hold the regime together, particularly in the short run. While Kim Jong-un is untested, his chances of remaining in power and consolidating his base are far greater today than they were in 2008, when his father is believed to have suffered from a serious stroke that may have incapacitated him for a time. The two Kims have had more than two years to engineer Kim Jong-un's succession by eliminating potential opponents, elevating loyalists, securing his appointments to key posts, and obtaining China's blessing for the transition from father to son. Among Kim Jong-un's most important supporters are believed to his aunt and uncle (Kim Jong-il's sister and her husband), Kim Kyong-hui and Jang Song Taek. Both have been given important positions over the past 19 months, and Jang in particular is expected to act as a type of regent, though some have also speculated that he could try to relegate Kim Jong-un to the role of a figurehead. Before his death, the elder Kim appears to have begun to decentralize the country's decision-making structure, which had been concentrated to a remarkable degree in his hands. Thus, it is possible that a collective form of leadership will emerge, perhaps centered in the National Defense Commission, with Kim Jong-un as its face. Another possibility is that more influence shifts to the communist party (officially called the Workers' Party of Korea, or WPK), where many North Korea watchers believe Kim Jong-un has a firmer base. Many will be watching Kim Jong-il's December 28 memorial service, to see who among North Korea's elite attends and where they are ranked in importance. Indeed, the service is likely to offer a unique glimpse into North Korean elite politics, which is among the most opaque aspects in an opaque country. Additionally, the powers of the North Korean state remain significant, as indicated by the smooth way the regime handled Kim Jong-il's death. The North Korean government delayed announcing Kim Jong-il's death for more than 50 hours. (By comparison, in 1994, the government waited approximately 30 hours to announce Kim il-Sung's death.) During the delay, there are reports that the government closed some markets, partially shut down the border with China, and notified members of the ruling elite. The fact that the regime was apparently able to carry out these operations, maintain secrecy, and operate the machinery of a transition without any major difficulties to date is an indication of the continued power of the state apparatus that the new leadership has inherited. Along these lines, it is possible that in the weeks and months to come, the Kim Jong-un regime will seek to continue the "softer" approach Kim Jong-il took for most of 2011, including the apparent food aid and nuclear agreements with the United States. Perhaps most importantly, the members of the elite are widely believed to have a strong interest in maintaining the status quo, which has enriched many of them and their families. In contrast, a sudden collapse of the government could unleash forces that eventually could lead to the loss of the established classes' wealth, privilege, and--in some cases--even life. The legitimacy and longevity of Kim Jong-un's reign is likely to be tied to his regime's ability to continue funneling money and gifts to the elite families. Thus, an important factor in North Korea's future is the government's access to outside funds. China is the key external player in this regard. Since 2008, when South Korea began curtailing most of its engagement with North Korea, China has emerged as North Korea's dominant economic partner, accounting for well over half of its trade and the lion's share of its inbound foreign direct investment, according to most estimates. Moreover, in late 2009, Beijing began providing more diplomatic support to North Korea, perhaps in an attempt to boost its influence as Kim Jong-il's health waned. Following Kim Jong-il's death, Chinese leaders have taken steps to indicate their support and solidarity with North Korea. For instance, every member of the China's highest level government body, the Standing Committee of the Chinese Communist Party's Politburo, visited the DPRK Embassy in Beijing to express condolences. Traditionally, the United States has had a number of goals with respect to North Korea, including limiting if not curtailing North Korea's ability to sell its nuclear and long-range missile technology, rolling back or containing its nuclear and missile programs, detering an attack on South Korea, and improving the lives of the average North Korean people. Kim Jong-il's death can be viewed as something of a Rorschach test for one's opinion of North Korea policy. Many who were inclined to favor negotiating with North Korea will likely argue that recent developments present an opportunity for engagement, while those seeking a harder-line approach will strongly disagree. The United States faces a range of options, many of which are not necessarily mutually exclusive, but all of which entail risks. Some have argued that the United States and South Korea should seek to engage the new leadership in North Korea, to probe its intentions. At a minimum, such an outreach conceivably could create disincentives for North Korea to take provocative actions, which some argue tend not to happen when North Korea is more engaged with the outside world. The year 2011 was one of these periods of a North Korean "charm offensive," when North Korea refrained from any military provocations while it asked the outside world for food donations, announced new economic projects with China and Russia, and sought to reopen the moribund Six-Party Talks over its nuclear programs. Many believe it is likely that the country's new leadership will continue along this path, since the leaders were already in positions of influence while these policies were formulated. Some analysts argue that without such engagement, North Korean nuclear weapons and missile development will proceed unchecked. Engagement could serve as a way to at least slow nuclear weapon and missile development in North Korea, even if the ultimate goal of denuclearization is not fulfilled in the near future. More ambitiously, it is conceivable that successful international negotiations with the United States and its allies could empower more moderate forces inside North Korea by allowing them to present diplomatic and economic achievements as an alternative to more bellicose options. In this vein, some analysts see Kim Jong-un as a possible symbol of the generational change that is taking place inside North Korea, in which a younger, more cosmopolitan group is poised to exert increasing influence, with perhaps a greater interest in economic reforms and rolling back the country's weapons of mass destruction programs. Most, though by no means all, North Korea watchers doubt the likelihood of this optimistic scenario. Few North Korea watchers believe North Korea's leaders will ever completely dismantle the country's nuclear weapons and long-range missile capabilities. Under Kim Jong-il, North Korea not only used these to deter an attack by the United States and its allies, but also as a means of extracting aid and other benefits from the outside world. Maintaining a weapons of mass destruction (WMD) program appears to have become integral to the regime's survival. Moreover, engagement risks providing North Korea with time and resources (indirectly) that could be used to refine its WMD capabilities, such as miniaturizing a nuclear warhead so that it is capable of being mounted on a long or medium range missile. Thus, some argue that the best, and perhaps only, way to neutralize the North Korean threat is by promoting regime change. In this line of thinking Kim's death presents an opportunity to actively seek to undermine the new regime. One set of options short of an outright military strike, which few if any advocate, revolves around aggressive steps such as psychological operations and unconventional attacks to try to destabilize the regime. However, the low probability of success and the high risk of triggering unrestrained warfare make these options unpalatable to all but the most hard-line advocates. While North Korea's small conventional attacks against South Korea in 2010 showed that that status quo could be costly, these costs generally are not thought to be sufficiently high as to justify an attempt to topple the regime in the short run. Instead, opponents of engagement often call for halting initiatives that provide benefits to North Korea, for stepping up interdiction efforts of nuclear and missile technology and other trade, and for ratcheting up economic, diplomatic, and military pressure against Pyongyang. One particular pressure point are the various North Korean individuals and entities that are charged with obtaining hard currency and foreign goods that the Kim regime has distributed to key members of the elite and the state apparatus. A weakness of the aggressive pressure approach is that China would likely be able to neutralize it by increasing its aid and support to Pyongyang, unless leaders in Beijing make a dramatic shift and at least tacitly allow the imposition of economic and diplomatic penalties on North Korea. China has long seen stability on the Korean Peninsula as its primary interest, and therefore been loathe to apply too much pressure on the regime. A dramatic Chinese turnabout on North Korea policy may have become less likely due to the Obama Administration's announcement of a "rebalancing" of U.S. foreign policy and military priorities toward the Pacific. Many Chinese leaders believe that this so-called "pivot" is aimed at containing Chinese ambitions, and therefore could become more suspicious of U.S. intentions with North Korea. A less antagonistic set of pressure options are what some have called "subversive engagement." These moves would involve the United States and South Korea aggressively attempting to further delegitimize the Kim regime by increasing elite and ordinary North Koreans' exposure to the outside world through such policies as increasing joint economic ventures, radio broadcasts, swamping North Korea markets with South Korean digital media, and setting up exchange and visitor programs. An advantage of these options is that many of them could be combined with any other approach, be it hard engagement or hard pressure. A disadvantage is that they likely will take years to have an impact, and in the meantime many could channel funds and support to the regime. Since the middle of 2009, the Obama Administration and South Korea's Lee Myung-bak government in effect have adopted a joint approach toward North Korea, often called "strategic patience," that has utilized both engagement and pressure, with an emphasis on the latter. In essence, the approach has had four main components: keeping the door open to Six-Party Talks over North Korea's nuclear program but refusing to re-start them without a North Korean assurance that it would take "irreversible steps" to denuclearize; insisting that Six-Party Talks and/or U.S.-North Korean talks must be preceded by North-South Korean talks on denuclearization and improvements in North-South Korean relations; gradually attempting to alter China's strategic assessment of North Korea; and responding to Pyongyang's provocations by tightening sanctions against North Korean entities, conducting a series of military exercises, and expanding cooperation with Japan. Strategic patience could be described as a passive-aggressive approach that effectively is a policy of containing North Korea's proliferation activities, rather than rolling back its nuclear program. Indeed, underlying the approach is an expectation that North Korea will almost certainly not relinquish its nuclear capabilities. One drawback is that it has allowed Pyongyang to control the day-to-day situation. While Washington and Seoul wait to react to Pyongyang's moves, the criticism runs, North Korea has continued to develop its uranium enrichment program, solidified support from China, and has embarked on a propaganda offensive designed to shape the eventual negotiating agenda to its benefit. The Obama and Lee governments' diplomacy with North Korea in late 2011 appear to be efforts to become more proactive on the engagement side of the ledger. The moves appear to be at least partially motivated by a desire to reduce North Korea's incentives to behave provocatively. And, they are made possible by signs that North Korea has softened its negotiating position, at least on a short-term basis. In the coming days, one item the North Koreans will be watching is whether President Obama himself offers an expression of sympathy, as Bill Clinton did after Kim Il-sung died. Looking farther ahead, after the initial mourning period has ended in on December 29, the Obama Administration will have an opportunity to test the new leadership's intentions, by virtue of U.S.-North Korea proposed agreements that were in various stages of negotiation. If Pyongyang proposes, and the Obama Administration welcomes, a new date for a round of bilateral talks with the United States that had been scheduled for the week of December 18, and if these talks are constructive, this would perhaps be the best indication that the regime intends to continue Kim Jong-il's most recent charm offensive. Reportedly, North Korea had agreed to a freeze on its uranium enrichment plant and international monitoring at the Yongbyon nuclear site, and to a nuclear and missile testing moratorium. In return, the Obama Administration reportedly had at least come close to agreeing in principle to resume large-scale shipments of food aid, labeled "nutritional assistance." Press reports indicate that the amount was 240,000 metric tonnes (MT), to be spread out over the coming two years, and that North Korean authorities consented to allow more rigorous monitoring by international aid officials of the food shipments inside North Korea. One possible sign that the two countries will continue working together occurred shortly after Kim Jong-il's death was announced, when U.S. officials discussed "technical details" of monitoring of the aid with their counterparts at the North Korean mission to the United Nations. Food aid to North Korea has been controversial ever since the United States began providing donations in the mid-1990s. In 2011, the House passed a measure--which the Senate rejected--that would have prohibited the Administration from using the primary U.S. food aid program to send food assistance to North Korea. By increasing the possibility of instability inside North Korea, Kim Jong-il's death has highlighted the value of discussing North Korean contingencies among the major powers involved in North Korean matters. Previous South Korean governments generally avoided this planning, for fear that it would jeopardize the "sunshine" policies of engaging North Korea. South Korea dropped this reluctance after the 2008 inauguration of the conservative Lee government, combined with Kim Jong-il's declining health and Pyongyang's increasingly provocative behavior. Trilateral discussions with Japanese officials have also taken place. However, over the years, China reportedly has resisted repeated U.S. and South Korean attempts to discreetly discuss North Korea contingency plans, even over issues such as coordinating a response to a natural disaster or a nuclear accident. It is unclear whether Kim Jong-il's death will change this situation. In the wake of the changing leadership situation in Pyongyang, a number of commentators have called on the Obama and Lee governments to redouble their behind-the-scenes efforts to hold these conversations with their Chinese counterparts. Three possible opportunities for high-level dialogue could present themselves in the coming weeks. First, in late December, Japanese Prime Minister Yoshihiko Noda will travel to Beijing for a meeting with top Chinese leaders. Then, in January 2012, Chinese Vice President Xi Jinping is to visit Washington, DC, for a trip that also was previously scheduled. Xi is widely expected to be chosen as China's top leader over the coming year. Also in January, South Korean President Lee will travel to China to meet with Chinese President Hu Jintao, a trip that was arranged after Kim Jong-il's death. CRS Report R41259, North Korea: U.S. Relations, Nuclear Diplomacy, and Internal Situation , by [author name scrubbed] CRS Report R41481, U.S.-South Korea Relations , coordinated by [author name scrubbed] CRS Report R40095, Foreign Assistance to North Korea , by [author name scrubbed] and Mary Beth Nikitin CRS Report RL34256, North Korea's Nuclear Weapons: Technical Issues , by Mary Beth Nikitin CRS Report R41438, North Korea: Legislative Basis for U.S. Economic Sanctions , by [author name scrubbed] CRS Report R41843, Imports from North Korea: Existing Rules, Implications of the KORUS FTA, and the Kaesong Industrial Complex , coordinated by [author name scrubbed] CRS Report RL30613, North Korea: Back on the Terrorism List? , by [author name scrubbed] CRS Report RL32493, North Korea: Economic Leverage and Policy Analysis , by [author name scrubbed] and [author name scrubbed] CRS Report RS22973, Congress and U.S. Policy on North Korean Human Rights and Refugees: Recent Legislation and Implementation , by [author name scrubbed] CRS Report R41043, China-North Korea Relations , by [author name scrubbed] and [author name scrubbed] CRS Report RS21473, North Korean Ballistic Missile Threat to the United States , by [author name scrubbed] CRS Report R41749, Non-Governmental Organizations Activities in North Korea , by [author name scrubbed] and [author name scrubbed] The United States The State Department The Passing of National Defense Commission Chairman Kim Jong Il Press Statement Hillary Rodham Clinton Secretary of State Washington, DC December 19, 2011 With the passing of National Defense Commission Chairman Kim Jong Il, the Democratic People's Republic of Korea is now in a period of national mourning. We are deeply concerned with the well being of the North Korean people and our thoughts and prayers are with them during these difficult times. It is our hope that the new leadership of the DPRK will choose to guide their nation onto the path of peace by honoring North Korea's commitments, improving relations with its neighbors, and respecting the rights of its people. The United States stands ready to help the North Korean people and urges the new leadership to work with the international community to usher in a new era of peace, prosperity and lasting security on the Korean Peninsula. PRN: 2011/2174 South Korea The Blue House December 20, 2011 Minister of Unification Yu Woo-ik announced the following Government statement agreed at a ministerial meeting on foreign affairs and security today. Fellow citizens, the Government is thoroughly monitoring the current situation while working closely with allies and neighbors so that peace on the Korean Peninsula will not be shaken by the sudden death of the North Korean National Defense Commission Chairman Kim Jong Il. Our Armed Forces are now maintaining high alert and bracing for any possible contingency. No unusual signs have yet been detected in the North. It is hoped that all citizens will go about their daily routines as usual without anxiety so that economic activities will not contract. Concerning the death of Chairman Kim Jong Il, the South Korean Government expresses its sympathy to the people of North Korea. The Government hopes North Korea will soon restore stability so that both Koreas will be able to work together for the sake of peace and prosperity on the Korean Peninsula. Considering that North Korea is in a mourning period, the Government decided to advise the religious community not to proceed with the lighting of Christmas trees in front-line areas this year, which was scheduled for December 23. We ask our fellow Koreans to cope with the situation in North Korea in a calm and resolute manner, while cooperating with the Government's policies. Statement by the Ministry of Unification on visits to North Korea for paying condolence calls. Concerning the dispatch of delegations to the North's funeral services, the Government has decided not to send an official delegation. However, the Government will allow family members of the late President Kim Dae-jung and Chairman Chung Mong-hun of the Hyundai Group to attend the funeral services in return for the North's dispatch of delegations to their funerals held in the South. China As appeared in Xinhua Domestic Service in Chinese, translated from by the Open Source Center, CPP20111219004011, Beijing 1310 GMT, 19 Dec 2011. Beijing, 19 Dec (Xinhua) - The CPC Central Committee, the National People's Congress [NPC] Standing Committee, the State Council, and the Central Military Commission [CMC] sent a message of condolences to the Central Committee of the Workers Party of Korea [WPK] , the WPK Central Military Commission, the Democratic People's Republic of Korea [DPRK] National Defense Commission, the Presidium of the Supreme People's Assembly of the DPRK, and the DPRK Cabinet ON 19 December to express deep condolences over the death of Comrade Kim Jong Il, general secretary of the WPK, chairman of the DPRK National Defense Commission, and supreme commander of the Korean People's Army [KPA]. Chinese Foreign Minister Yang Jiechi summoned Pak Myong Ho, charge d'affaires of the DPRK Embassy in Beijing and handed to him the message of condolences. The message reads in full as follows: Pyongyang The WPK Central Committee The WPK Central Military Commission The DPRK National Defense Commission The Presidium of the DPRK Supreme People's Assembly The DPRK Cabinet: We were was shocked to learn of the unfortunate demise of Comrade Kim Jong Il, general secretary of the WPK, chairman of the DPRK National Defense Commission and supreme commander of the KPA. With incomparable sorrow, we hereby extend our most profound condolences and our most sincere sympathy to the DPRK people on his demise. Comrade Kim Jong Il was a great leader of the WPK and the DPRK people who dedicated the whole of his life and rendered immortal service to the great cause of the DPRK people in building a DPRK-style powerful and prosperous socialist country. Comrade Kim Jong Il, a close friend of the Chinese people, had carried on and further developed with utmost enthusiasm the traditional friendship between China and the DPRK, which was established and cultivated by the revolutionaries of the older generation of the two countries. He had established profound friendship with Chinese leaders and had strongly pushed forward the development of the China-DPRK good-neighborly friendly and cooperative relationship. The Chinese party, government, and people were deeply saddened by the passing away of Comrade Kim Jong Il, who will be remembered forever by the Chinese people. Even though Comrade Kim Jong Il has passed away, he will live forever in the hearts of the DPRK people. We believe that the DPRK people will carry forward his unfulfilled wishes, rally closely around the WPK, and under the leadership of Comrade Kim Cho'ng-u'n" [Kim Jong Un], turn their sorrow into strength, continuously advance toward the goal of building a strong and prosperous socialist nation and achieving sustained peace on the Korean Peninsula. China and the DPRK are good neighbors linked by mountains and waters and stand together, sharing weal and woe. It is the consistent policy of the Chinese party and government to make constant efforts to consolidate and develop the traditional friendly and cooperative relations between China and the DPRK. We firmly believe that through joint efforts, friendship between the Chinese and DPRK parties, states, and peoples will continuously consolidate and develop. The Chinese people will stand together with the DPRK people forever! Eternal Glory to Comrade Kim Jong Il! [By] The CPC Central Committee The NPC Standing Committee of the PRC The State Council of the PRC The Central Military Commission of the PRC [Dated] 19 December 2011 in Beijing

North Korea represents one of the United States' biggest foreign policy challenges due to its production and proliferation of nuclear weapons and missiles, the threat of attacks against South Korea, its record of human rights abuses, and the possibility that its internal problems could destabilize Northeast Asia. The North Korean government's December 19, 2011, announcement of the death of the country's "Dear Leader," Kim Jong-il, has the potential to be a watershed moment in the history of the Korean Peninsula and the region. Ever since the death of his father, the "Great Leader" Kim Il Sung, in 1994, Kim Jong-il had sat at the apex of a highly centralized, brutal regime. During his tenure, his regime subjected North Korea's people to profound impoverishment and massive food shortages, developed nuclear weapons and long-range missiles, and sold technology related to both programs abroad. The effect of Kim Jong-il's death on North Korea's stability is uncertain. Many experts doubt that his anointed successor, his third son Kim Jong-un, will over the course of time be able to maintain effective control over his country due to his relative inexperience and the mounting internal and external pressures confronting North Korea. Yet, the North Korean regime under the elder Kim proved to be remarkably resilient, and many of the forces that held it together will continue to operate even if the young Kim himself remains weak. A key to the Kim Jong-un regime's stability will be its ability to continue obtaining and distributing funds, mostly from external sources. Of particular importance will be China's willingness to provide commercial, financial, and other support for the regime. Over the years, China reportedly has resisted repeated U.S. and South Korean attempts to discuss North Korea contingency plans. It is unclear whether Kim Jong-il's death will change this situation, though there have been calls to redouble outreach to Beijing. A possible opportunity for high-level dialogue could come in January 2012, when Chinese Vice President Xi Jinping visits Washington, DC. Xi is widely expected to be chosen as China's top leader over the coming year. Very little is known about the inner workings of the North Korean elite, as evidenced by the U.S. and South Korean intelligence services apparent surprise at the announcement of Kim Jong-il's death. Even less is known about Kim Jong-un, who is believed to be in his late 20s and to have attended primary school in Switzerland in the 1990s. Kim Jong-un was being groomed to be the successor since his father's August 2008 stroke that put a spotlight on the succession question. In the days after the announcement, U.S. and South Korean officials issued statements that expressed support for the North Korean people, hope that the new leadership will continue recent diplomatic initiatives with Washington and Seoul, and a desire for a smooth transition in Pyongyang. (For the text of these statements as well as a joint message from several Chinese state and communist party organs, see the Appendix . U.S. and South Korean influence over events in North Korea is widely believed to be limited. In the coming weeks, the Obama Administration will be confronted with a decision of whether to persist with two proposed new agreements that reportedly were in the process of being concluded with the Kim Jong-il government in mid-December: a resumption of U.S. food assistance, and in return, a reported agreement by North Korea to shut down key sites of its nuclear program and open them to international monitoring. Members of Congress will have the opportunity to support or oppose these moves, as well as to propose new pressure and engagement tactics of their own.

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, and identifies related congressional hearing records and reports. Two appendixes provide background and legal analysis regarding a 2011 statute that allowed Robert S. Mueller III to be appointed to a second, two-year term. 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. Since 1972, seven nominations for FBI Director have been confirmed, and two other nominations have been withdrawn. Due to a 2011 statute allowing for the reappointment of a specific incumbent, two of the seven 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 others 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 responsible 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. From 1973 through 2013, Sessions was the only FBI Director 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, and he was confirmed by the Senate on August 2, 2001, by a vote of 98-0. Mueller 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 2013, 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 vote of 100-0. Mueller's two-year term expired on September 4, 2013. The legislative circumstances surrounding Mueller's reappointment are further detailed in Appendix A . Notably, the law passed by Congress to extend Muller's tenure raised legal questions that might arise again in the event of a similar situation. In view of this possibility, Appendix B discusses precedent for lengthening the tenure of an office and the constitutionality of extending the tenure of the directorship for the current incumbent. It further addresses whether it would have been necessary for Mueller to be appointed a second time and be subject to Senate confirmation hearings under such circumstances, given that an earlier version of the Senate bill would have allowed a two-year term without confirmation. 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 United States 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 10-year term of office on September 4, 2013. 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 Directo r, 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. --. 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. Appendix A. Reappointment of Robert S. Mueller III The 10-year term of Director Robert S. Mueller III was due to expire in August or September 2011. In early May 2011, the White House announced that President Barack Obama would seek legislation to permit Mueller to stay for an extra two years, citing the need for continuity in national security at the FBI while leadership transitions take place at other intelligence agencies. On May 26, 2011, Senator Patrick J. Leahy, chairman of the Senate Committee on the Judiciary, introduced S. 1103 , a bill to extend the term of the incumbent Director of the FBI for an additional two years. The bill would not have required renomination or reconfirmation of the incumbent. S. 1103 was cosponsored by the ranking Member of the committee, Senator Chuck Grassley, as well as the leadership of the Senate Select Committee on Intelligence, Chairman Dianne Feinstein and Vice Chairman Saxby Chambliss. On June 8, 2011, the Senate Committee on the Judiciary held a hearing on the proposed extension of Mueller's tenure. Mueller was the first witness, and responded to Members' questions about both the proposal to extend his term in office and substantive issues related to the policies and operations of the FBI. During the second, and final, panel of the hearing, the questions and statements of committee Members, as well as the testimony of witnesses, was primarily directed toward constitutional considerations related to the bill. On June 16, 2011, the Senate Committee on the Judiciary considered the bill, and adopted, by unanimous consent, a substitute amendment offered by Chairman Leahy that added a section on findings to the original text. The committee tabled an amendment offered by Senator Tom Coburn that would have authorized an additional two-year term to which the current incumbent could be nominated and confirmed with the consent of the Senate. The committee voted to report favorably the bill, as amended, and issued an accompanying report on June 21, 2011. A few days later, at the request of Senator Coburn, minority views on the bill were printed in the Congressional Record by unanimous consent. Subsequent news reports indicated that the Administration had agreed to the Coburn approach to renominate the Director for an extra two-year period. Chairman Leahy, on July 18, 2011, remarked that he "was willing to proceed along the lines of an alternative approach" proposed by Senator Coburn because he "was assured by the Senator from Oklahoma that he would get unanimous consent to do all the short time agreements to get the bill passed, get his amendment passed, get it through the House and back, and get Director Mueller confirmed with a 2-hour time agreement." Even though he had indicated earlier that this could be "an additional, unnecessary and possibly dangerous complication," Chairman Leahy concluded that "if we did all of [the aforementioned before August 2, 2011], it would not be the best of solutions, but it would be better than what we have now." Although reportedly subject of a hold that was eventually lifted, the Senate, on July 21, 2011, took up the bill and amended it with the Coburn language. The bill, as amended, was then passed by unanimous consent. The Senate also agreed that, if the bill were passed by the House and signed into law, a subsequent nomination would receive expedited consideration [I]f Robert S. Mueller, III, is nominated to be Director of the Federal Bureau of Investigation, the nomination be placed directly on the Executive Calendar; that at a time to be determined by the majority leader, in consultation with the Republican leader, the Senate proceed to executive session to consider the nomination; that there will be 2 hours for debate equally divided in the usual form; that upon the use or yielding back of time, the Senate proceed to vote without intervening action or debate on the nomination; the motion to reconsider be considered made and laid upon the table with no intervening action or debate; that no further motions be in order to the nomination; that any statements related to the nomination be printed in the Record; that the President be immediately notified of the Senate's action, and the Senate resume legislative session. The House considered the bill under suspension of the rules, and it was approved by voice vote. On the following day, July 26, President Obama signed the bill into law ( P.L. 112-24 ). President Obama immediately nominated Mueller to a second, two-year term. The Senate considered the nomination pursuant to the terms of the July 21 agreement. On July 27, 2011, Mueller was confirmed by a vote of 100-0. Appendix B. Legal Overview of Extending a Term of Office This appendix first discusses precedent for lengthening the tenure of an office. It is followed by a discussion regarding the constitutionality of extending the tenure of the directorship of the FBI, as well as whether it would have been necessary for Mueller to be appointed a second time and be subject to Senate confirmation hearings under such circumstances. Appointment and Precedent for Extending a Term of Office Congress has previously lengthened the term of office for incumbents. For example, Congress extended the terms of the members serving on the Displaced Persons Commission for purposes of permitting the commission to finish carrying out its duties. The original act, passed in 1948, established a commission consisting of three commissioners, appointed by the President with the advice and consent of the Senate, whose terms were to end June 30, 1951. Prior to June 30, however, Congress amended the act to extend the terms of the commissioners, and that of the commission, through August 31, 1952. The Attorney General issued an opinion in response to the President's inquiry as to whether two incumbent commissioners' existing appointments were valid until August 31, 1952, or if the commissioners would cease to hold office on June 30, 1951. Citing prior incidents where Congress extended terms of offices for certain commissions, the Attorney General concluded there would be no need for the President to submit new nominations to the Senate, and that the two commissioners would continue to hold office validly after June 30. Congress has also extended the life of the United States Parole Commission (Parole Commission) several times and the tenure of its commissioners twice. Although its history dates back to the 1930s, Congress, in 1976, established the Parole Commission as an independent agency within the Department of Justice, with nine commissioners to be appointed by the President with the advice and consent of the Senate for a term of six years. Under the statute, a commissioner can hold over until his successor is nominated and qualified, but may not serve for longer than 12 years. Although Congress enacted a law to abolish the Parole Commission in 1984, it effectively extended, on a temporary basis, the life of the Parole Commission and the terms of offices for an additional five years from the time the sentencing guidelines became effective. This meant that beginning in 1987, the incumbent commissioners, whose terms would have otherwise expired in six years, could serve for an additional five years. With the Parole Commission and the terms of office slated to expire in 1992 per the five-year extension, Congress, again, lengthened the life of the commission and the tenure of the incumbent officers for another five years through 1997. Even though the existence of the commission was extended several times thereafter, Congress, in 1996, when it extended the life of the commission for another five years through 2002, repealed the provision that would have simultaneously extended the terms of the commissioners' offices. This action "reinstituted" the 12-year time limit, meaning that some of the long-standing incumbent officers would not be able to continue serving. Because of the lengthened tenures, a few of the commissioners, who otherwise would have had to be reappointed after their sixth year (assuming they were not staying pursuant to the holdover clause), continued to hold office validly without reappointment or a second confirmation hearing. For example, Commissioner Vincent J. Fechtel Jr. served for a total of 13 years from November 1983 to April 1996. It is also worth noting that when Congress considered the single 10-year term limit for the FBI Director, other proposed term limitations raised during the Senate debate included a single 10-year term with an additional 5 years, subject to approval by Congress, and a 4-year term with the right to reappoint for additional 4-year terms. It also appears that the original bill ( S. 2106 ) as introduced by Senator Robert C. Byrd in the 93 rd Congress would have permitted the FBI Director to serve no more than two 10-year terms. In the aftermath of J. Edgar Hoover's near 50 years as Director of the FBI and the inherent political sensitivities of the position, Senator Byrd stated that "after much reflection, that 20 years is too long a time for any one man to be Director of the Federal Bureau of Investigation.... [s]o S. 2106 , if it is amended, I believe will erect a valuable check upon the possible abuse of executive power." Constitutionality of Extending the FBI Director's Term of Office The constitutionality of extending an officer's fixed term of office, specifically the Director of the FBI, depends on how a proposed extension reads and whether the President will be able to retain plenary authority to remove such officer. It is first necessary to review the appointments framework established by the U.S. Constitution and the accompanying Supreme Court decisions that discuss Congress's ability to place restrictions on the President's ability to remove an officer. Next, these principles are applied to analyze whether there would be any constitutional implications in extending the FBI Director's term of office. Appointments Clause Framework The Appointments Clause of the U.S. Constitution states 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." It has long been recognized that "the power of removal [is] incident to the power of appointment." This maxim was addressed more fully in Myers v. United States , where the Supreme Court addressed the President's summary dismissal of a postmaster from office, in contravention of a statute requiring that the President obtain the advice and consent of the Senate prior to removal. In Myers , the Supreme Court ruled that the President possesses plenary authority to remove presidentially appointed executive officers who have been confirmed by the Senate, and other presidentially appointed executive officers, so long as Congress does not expressly provide otherwise. Clarifying the scope of the appointment power, the Court noted that while Congress can imbue Cabinet officers with the power to appoint inferior officers and place incidental regulations and restrictions on when such department heads can exercise their power of removal, Congress may not involve itself directly in the removal process. Notwithstanding the seemingly clear limitations on the ability of Congress to interfere with the President's appointment and removal power, the Supreme Court, in Humphrey's Executor v. United States , unanimously upheld a law that restricted the President's ability to remove an agency official. Specifically at issue was a provision of the Federal Trade Commission (FTC) Act, which provided that the President could remove an FTC commissioner only on the basis of inefficiency, neglect of duty, or malfeasance in office. To distinguish the case at hand, the Court held that Myers was limited to "purely executive officers," as "such an officer [i.e., the postmaster] is merely one of the units in the executive department and, hence, inherently subject to the exclusive and illimitable power of removal by the Chief Executive, whose subordinate and aid he is." Thus, the holding in Myers did not reach and could not include officers not in the executive department or those who exercised "no part of the executive power vested by the Constitution in the President." Explaining that the FTC was not an executive body, but rather functioned as a "quasi-legislative or quasi-judicial" agency, the Court ruled that Congress possessed the authority to control the terms of removal for such officers. This approach to removal shifted in Morrison v. Olson , where the Supreme Court clarified that the proper inquiry regarding removal power questions should focus not on an officer's status as either "purely executive" or "quasi-legislative," or "quasi-judicial," but rather, on whether a removal restriction interferes with the ability of the President to exercise executive power and to perform his constitutional duty. Applying this maxim to the statute at issue, which provided that an independent counsel could only be removed for "good cause" by the Attorney General, the Court found that the independent counsel lacked significant policymaking or administrative authority despite being imbued with the power to perform law enforcement functions. As such, the Court in Morrison determined that removal power over the independent counsel was not essential to the President's successful completion of his constitutional duties. The Court's decision in Morrison appeared to further weaken the standard delineated in Myers because Morrison essentially established that there are no formal categories of executive officials who may or may not be removed at will. As a result, any inquiry in a removal case where Congress places a restriction on the President's power to remove, such as a given "for cause" removal requirement, will necessarily focus on whether the restriction impermissibly interferes with the President's ability to perform his constitutionally assigned functions. Extending the Director of the FBI's Term of Office Accordingly, the principles discussed above establish that the President may remove the Director of the FBI at will, given that the "power of removal [is] incident to the power to remove." Indeed, President Bill Clinton exercised this removal power on July 19, 1993, by firing FBI Director William S. Sessions. In particular, upon receiving a recommendation from Attorney General Janet Reno that Sessions be removed, President Clinton informed Sessions: "I am hereby terminating your service as Director of the Federal Bureau of Investigation, effective immediately." It should also be noted that during Senate consideration of the 1976 measure, Senators Byrd and Hruska emphasized several times that "there is no limitation on the constitutional power of the President to remove the FBI Director from office within the 10-year term. The Director would be subject to dismissal by the President as are all purely executive officers." Even though the Administration asked Congress to extend the FBI Director's tenure, such congressional action could give rise to constitutional concerns. A court would likely evaluate such a proposal under the principles discussed above, specifically whether such an extension would be seen as a congressional intrusion on the appointments process and whether such action would "impede the President's ability to perform his constitutional duty." A court reviewing a proposed extension may find that such action does not violate the Appointments Clause or impermissibly interfere with the President's ability to perform his constitutionally assigned functions, because the President would still have the plenary authority to remove the Director during the extended two years. Moreover, a court could find that such a proposal would not be constitutionally questionable, given the generally accepted principle that the legislature has the power to "create or abolish [offices], or modify their duties, [and to] shorten or lengthen the term of service." If, however, the Director's term had an existing statutory "for cause" removal protection, then it is possible that a proposed extension could be viewed as being equivalent to congressional reappointment, and therefore in violation of Appointments Clause and separation of powers principles. Opinions of the Attorneys' General and the Department of Justice's Office of Legal Counsel (OLC), espousing the views of the executive branch, traditionally have concluded as much. With the 1951 Attorney General opinion addressing the Displaced Persons Commission and the 1994 OLC opinion addressing the Parole Commission, the Department of Justice has consistently concluded that the lengthening of an officer's tenure "presents no constitutional difficulties," because nothing in those statutes "requires [the President] to continue the incumbents in office." A 1996 OLC opinion, which summarized its view on the constitutionality of lengthening the tenure of an office, stated, At the one end is constitutionally harmless legislation that extends the term of an officer who is subject to removal at will. At the other end is legislation ... that enacts a lengthy extension to a term of office from which the incumbent may be removed only for cause. Legislation along this continuum must be addressed with a functional analysis. Such legislation does not represent a formal appointment by Congress and, absent a usurpation of the President's appointing authority, such legislation falls within Congress's acknowledged authority--incidental to its power to create, define, and abolish offices--to extend the term of an office. As indicated, constitutional harm follows only from legislation that has the practical effect of frustrating the President's appointing authority or amounts to a congressional appointment. Although the Department of Justice views extension of a term of office from which the incumbent may be removed only for cause as constitutionally suspect, courts have repeatedly upheld the Bankruptcy Amendments and Federal Judgeship Act of 1984, a law that extended the tenure of bankruptcy judges who can be removed only for cause. The U.S. Court of Appeals for the Ninth Circuit (Ninth Circuit) in In re: Benny did not distinguish between "at will" versus "for cause" positions in deciding the constitutionality of the act. Rather, without detailed analysis, the Ninth Circuit concluded that "Congress' power to extend prospectively terms of office can be implied from its power to add to the duties of an office other duties that are germane to its original duties." The court found that the extension of a term of office "becomes similar to [a congressional] appointment [only] ... when it extends the office for a very long time." In a concurring opinion, Judge Norris disagreed and stated: "I believe the Appointments Clause precludes Congress from extending the terms of the incumbent officeholders. I am simply unable to see any principled distinction between congressional extensions of the terms of incumbents and more traditional forms of congressional appointments" (emphasis in the original). He further disagreed with the majority's distinction between a "short" and "long" extension as prompting a violation of separation of powers principles, noting that "the Supreme Court has implicitly rejected the notion that the Constitution proscribes appointments only if they are 'long' rather than 'short.'" While the holding in this case or the reasoning of Judge Norris could be applied in the future, the 1996 OLC opinion stated that it found the reasoning in Benny unpersuasive and that the doctrine may be limited to its factual context, given that "an enormous number of decisions within the bankruptcy system," might have been put into question had the court reached the opposite conclusion. The OLC issued an opinion on June 20, 2011, concluding that it would be constitutional for Congress to enact legislation extending the term of the Director of the FBI. It reaffirmed that "[t]he traditional position of the Executive Branch has been that Congress, by extending an incumbent officer's term, does not displace and take over the President's appointment authority, as long as the President remains free to remove the officer at will and make another appointment." The OLC opinion emphasized that "legislation extending a term does not represent a formal appointment by Congress," (quotation omitted) nor is it " functionally the equivalent of a congressional appointment" (emphasis in the original). The opinion also dismissed as speculative any notion that a term-extension legislation violates the Appointments Clause because it may impose some political cost on the President. Lastly, given the precedent of not formally reappointing an individual whose term of office is to be extended, it is likely that an incumbent Director would not need to be nominated or appointed a second time. While there would be no need for a second confirmation hearing, the Senate, at its discretion, could invite Mueller to answer questions as it has periodically done with various agency officials.

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. Over this time, seven nominations have been confirmed and two have been 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. Since 1972, one Director has been removed by the President. 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. On June 21, 2013, President Obama nominated James B. Comey Jr., a former Deputy Attorney General, to succeed Mueller. Comey was confirmed by the Senate on July 29, 2013, and he took office on 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, and identifies related congressional hearing records and reports. Two appendixes to the report provide information and analysis concerning the 2011 extension of the Director's tenure. Appendix A documents the successive developments that enabled this extension, including the enactment of P.L. 112-24 and Mueller's nomination and confirmation. Appendix B provides a legal overview and analysis of extending a term of office. This report will be updated as developments warrant.

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

The rise of cryptocurrencies like Bitcoin and the use of Initial Coin Offerings to raise capital has drawn increased attention from both the public and private sector concerning the use of digital ledgers to conduct business (called blockchain technology) and its potential. Yet many remain unclear on what the technology actually is, what it does, and the tradeoffs for its use. A blockchain is a digital ledger that allows parties to transact without the use of a central authority as a trusted intermediary. In this ledger, transactions are grouped together in blocks, which are cryptographically chained together in a way that is tamper-proof and creates a mathematically indisputable history. Blockchain is not a new technology; rather it is an innovative way of using existing technologies. The technologies underpinning blockchain are asymmetric key encryption, hash values, Merkle trees, and peer-to-peer networks. Blockchain allows parties who may not trust each other to agree on the current distribution of assets and who has those assets, so that they may conduct new business. But, while there has been a great deal of hype concerning blockchain's benefits, it also has certain pitfalls that may inhibit its utility. With blockchain, as transactions are added, the identities of the parties conducting those transactions are verified, and the transactions themselves are verifiable by other users. The strong relationship between identities, transactions, and the ledger enables parties that may not trust each other or an individual computing platform to agree on the state of resources as logged in the ledger. With that agreement, they may conduct a new transaction with a common understanding of who has which resource and their ability to trade that resource. Blockchain is not a panacea technology. A blockchain records events as transactions when they happen, in the order they happen, and in an add-on only manner. Previous data on the blockchain cannot be altered, and users of the blockchain have access to the data on the blockchain in order to validate the distribution of resources. Though there are benefits to blockchain, there are also pitfalls and unsolved conditions which may inhibit blockchain use. Some of those concerns are data portability, ill-defined requirements, key security, user collusion, and user safety. As with adopting any technology, users must examine the business, legal, and technical aspects of that technology. Blockchain is currently being tested by industry, but at this time does not appear to be a complete replacement for existing systems. Although the adoption of blockchain is in its early stages, Congress may have a role to play in several areas, including the oversight of federal agencies seeking to use blockchain for government business, and exploration of whether regulations are necessary to govern blockchain's use in the private sector. Some federal agencies are seeking to better manage identities, assets, data, and contracts through the adoption of blockchain technology. In addition, some federal agencies are issuing guidance on industry use of blockchain, and whether or not the current legal framework governs blockchain use.

Congressional efforts to establish standards for House districts have a long history. Congress first passed federal redistricting standards in 1842, when it added a requirement to the apportionment act of that year that Representatives " should be elected by districts composed of contiguous territory equal in number to the number of Representatives to which each said state shall be entitled, no one district electing more than one Representative ." (5 Stat. 491.) The Apportionment Act of 1872 added another requirement to those first set out in 1842, stating that districts should contain " as nearly as practicable an equal number of inhabitants. " (17 Stat. 492.) A further requirement of "compact territory" was added when the Apportionment Act of 1901 was adopted stating that districts must be made up of " contiguous and compact territory and containing as nearly as practicable an equal number of inhabitants. " (26 Stat. 736.) Although these standards were never enforced if the states failed to meet them, this language was repeated in the 1911 Apportionment Act and remained in effect until 1929, with the adoption of the Permanent Apportionment Act, which did not include any districting standards. (46 Stat. 21.) After 1929, there were no congressionally imposed standards governing congressional districting; in 1941, however, Congress enacted a law providing for various districting contingencies if states failed to redistrict after a census--including at-large representation. (55 Stat 761.) In 1967, Congress reimposed the requirement that Representatives must run from single-member districts, rather than running at large. (81 Stat. 581.) Both the 1941 and 1967 laws are still in effect. The 1967 law, codified at 2 U.S.C. SS 2c, requiring single-member districts, appears to conflict with the 1941 law, codified a 2 U.S.C SS 2a(c), which provides options for at-large representation if a state fails to create new districts after the reapportionment of seats following a census. The apparent contradictions may be explained by the somewhat confusing legislative history of P.L. 90-196 (2 U.S.C. SS 2c), prohibiting at-large elections. The legislative history of the 1967 law, mandating single-member districts (P.L. 90-196), is unusual. The portion of the bill that became 2 U.S.C. SS 2c was a Senate amendment to a House-passed private immigration act--H.R. 2275, 90 th Congress, "an act for the relief of Dr. Ricardo Vallejo Samala, and to provide for congressional redistricting." No hearings were held or reports issued on the at-large election prohibition that became 2 U.S.C. SS 2c, "Number of Congressional Districts; number of Representatives from each District": In each State entitled in the Ninety-first Congress or in any subsequent Congress thereafter to more than one Representative under an apportionment made pursuant to the provisions of section 2a(a) of this title, there shall be established by law a number of districts equal to the number of Representatives to which such State is so entitled, and Representatives shall be elected only from districts so established, no district to elect more than one Representative (except that a State which is entitled to more than one Representative and which has in all previous elections elected its Representatives at large may elect its Representatives at large to the Ninety-first Congress). H.R. 2275 was enacted after another bill (H.R. 2508, also 90 th Congress) that included similar language pertaining to at-large representation failed final passage after two conferences--the first was recommitted in the House and the second was defeated in the Senate. H.R. 2508 also included additional provisions regarding population equality plus geographical compactness and contiguousness. H.R. 2508 would have deleted subsection (c) of section 22 of the Apportionment Act of 1929, as amended, (codified as 2 U.S.C. SS2a(c)) and substituted the bill's redistricting standards that also included a ban on at-large elections. Section 2a(c) of Title 2 currently provides: Until a State is redistricted in the manner provided by the law thereof after any apportionment, the Representatives to which such State is entitled under such apportionment shall be elected in the following manner: (1) If there is no change in the number of Representatives, they shall be elected from the districts then prescribed by the law of such State, and if any of them are elected from the State at large they shall continue to be so elected; (2) if there is an increase in the number of Representatives, such additional Representative or Representatives shall be elected from the State at large and the other Representatives from the districts then prescribed by the law of such State; (3) if there is a decrease in the number of Representatives but the number of districts in such State is equal to such decreased number of Representatives, they shall be elected from the districts then prescribed by the law of such State; (4) if there is a decrease in the number of Representatives but the number of districts in such State is less than such number of Representatives, the number of Representatives by which such number of districts is exceeded shall be elected from the State at large and the other Representatives from the districts then prescribed by the law of such State; or (5) if there is a decrease in the number of Representatives and the number of districts in such State exceeds such decreased number of Representatives, they shall be elected from the State at large. It is clear from committee report language and both the House- and Senate-passed versions of H.R. 2508 that 2 U.S.C. SS 2a(c) would have been superseded by new language had it been enacted and approved by the President. H.R. 2275 ( P.L. 90-196), which was enacted after the second conference report on H.R. 2508 was defeated in the Senate, did not amend 2a(c). Thus, Public Law 90-196 was codified in a separate part of the U.S. Code (2 U.S.C. SS 2c), rather than as replacement language for 2 U.S.C. SS 2a(c). These apparently contradictory provisions raise questions about how Section 2(a)c, which provides for at-large House elections under certain circumstances, can be reconciled with Section 2c, which prohibits them. Section 2a(c) of Title 2 could be invoked if a state that had gained or lost Representatives after a census failed to complete the redistricting process before the first election following the reapportionment of seats among the states. One could argue, contrarily, that since Section 2a(c) was enacted in 1941 and Section 2c was enacted in 1967, the prohibition of at-large and multi-member districts in Section 2c implicitly repeals the contingencies for running at large provided in 2a(c), thus making Section 2a(c) a dead letter. Further buttressing the dead letter theory is the 40-year history of active court involvement in redistricting. When Section 2a(c) was enacted in 1941, courts were constrained by years of precedent limiting their entrance into the "political thicket" of redistricting. After the Supreme Court established the "one person, one vote" principle beginning with its 1962 landmark decision in Baker v. Carr , and Congress passed the Voting Rights Act of 1965, courts have intervened numerous times in the state redistricting process. In Branch v. Smith , decided on March 31, 2003, the Supreme Court addressed the issue of how these two statutory provisions can be reconciled. In the reapportionment following the 2000 census, Mississippi's delegation size was reduced from five Representatives to four. When it appeared that the legislature would not be able to pass a redistricting plan in time for candidates to file to run for office, both the Mississippi state court and a three-judge federal court drafted redistricting plans. The federal district court, however, decided that its plan would only be used if the Mississippi state court plan was not precleared by the U.S. Department of Justice, pursuant to the Voting Rights Act, in time for the March 1 filing deadline for state and federal candidates. As the Justice Department did not preclear the state court plan by the deadline, the district court plan was used for the 2002 elections. After finding that the federal district court had properly enjoined the enforcement of the state court plan, the Supreme Court turned to the issue of whether Section 2a(c) requires courts to order at-large elections if a state redistricting plan is not in place prior to court action. The original state plaintiffs and the United States as amicus curiae, had argued that the district court was required to draw single-member districts in crafting a congressional plan, while the original federal plaintiffs had contended that the district court was required to order at-large elections. Rejecting the original federal plaintiffs' argument, a majority of the Supreme Court held that the lower court was required to fashion a plan with single-member districts. However, writing two separate concurring opinions, a majority of the Court did not reach consensus as to the rationale behind its holding, thereby leaving the reconciliation of Sections 2a(c) and 2c unsettled. In the first concurrence (written by Justice Scalia, joined by the Chief Justice, Justices Kennedy and Ginsburg), a plurality of the Court interpreted the at-large option in Section 2a(c)(5) as merely a "last-resort remedy," being applicable only in those cases where time constraints prevent a single-member plan from being drawn in time for an election. According to the Scalia concurrence: SS2a(c) is inapplicable unless the state legislature and state and federal courts, have all failed to redistrict pursuant to SS2c. How long is a court to await that redistricting before determining that SS2a(c) governs a forthcoming election? Until, we think, the election is so imminent that no entity competent to complete redistricting pursuant to state law (including the mandate of SS2c) is able to do so without disrupting the election process. Only then may SS2a(c)'s stopgap provisions be invoked. Thus, SS2a(c) cannot be properly applied--neither by a legislature nor a court--as long as it is feasible for federal courts to effect the redistricting mandated by SS2c. So interpreted SS2a(c) continues to function as it always has, as a last-resort remedy to be applied when, on the eve of a congressional election, no constitutional redistricting plan exists and there is no time for either the State's legislature or the courts to develop one. On the other hand, in a second concurrence (written by Justice Stevens, joined by Justices Souter and Breyer), a separate plurality of the Court, while agreeing that the district court properly enjoined enforcement of the state court's plan and drew its own single-member plan under 2 U.S.C. SS 2c, concluded that Section 2c "impliedly repealed" Section 2a(c). In a dissent, Justice O'Connor, (joined by Justice Thomas), found that when federal courts are asked to redistrict states that have lost representation after a reapportionment, and the existing plan has more districts than the new allocation permits and no new plan has been promulgated with the correct number of districts, the courts are required to order at-large elections in accordance with 2 U.S.C. SS 2a(c). It could be argued that at-large elections will not be needed in the post-1960s era because the courts now intervene when the states reach impasse and fail to redistrict following the decennial census. Nevertheless, since the issue of whether federal law permits at-large congressional representation appears unsettled, if a House delegation were elected at large, it appears that their seating could be challenged in the House of Representatives on the grounds that their election violates Section 2c, which prohibits at-large elections. A challenged delegation might raise the defense that since Congress did not expressly repeal the contingencies enumerated in Section 2a(c) when it enacted Section 2c, it has therefore recognized the possibility of an at-large delegation, which should be seated, despite having been elected in violation of Section 2c. Perhaps the best argument that the single-member district requirement might be ignored by the House in certain circumstances stems from 19 th century House precedent. As noted in footnote 1 supra, at-large delegations were seated after they were prohibited in 1842. Moreover, a challenged delegation could argue that refusing to seat them would deprive an entire state of representation in the House. Thus, one would expect that the 19 th century precedent would be followed today, although such precedent might be less compelling if the organization of the House were at stake. One could also argue that the contingencies set forth in 2 U.S.C. SS 2a(c) still serve as a useful insurance policy to provide representation for a state that cannot, following the release of census numbers, complete the post-census redistricting process in time for the first congressional election. In 1967 Congress could have repealed Section 2a(c), as provided in the more far-reaching redistricting standards bill (H.R. 2508). Instead, Congress adopted P.L. 90-196, codified at 2 U.S.C. SS 2c, which prohibits multi-member districts, leaving Section 2a(c) in place, which permits them. On January 28, 2003, Representative Hastings introduced H.R. 415 (108 th Cong.), a bill to establish a commission to make recommendations on the appropriate size of membership of the House of Representatives and the method by which Members are elected. Section 3(2) of H.R. 415 requires the commission to "examine alternatives to the current method by which Representatives are elected (including cumulative voting and proportional representation) to determine if such alternatives would make the House of Representatives a more representative body." Such recommendations, if ultimately enacted, could affect current federal statutory provisions governing single-member and at-large representation in the House of Representatives. H.R. 415 was referred to the House Committee on the Judiciary and no further action has been taken to date.

Section 2c of Title 2 of the U.S. Code requires members of the House of Representatives to be elected from single-member districts, however, Section 2a(c) requires Representatives to be elected at large if a state fails to create new districts after the reapportionment of seats following a decennial census. These apparently contradictory provisions raise questions about whether and under what circumstances federal law permits at-large representation in the House of Representatives. The legislative history of 2 U.S.C. SS 2c is sparse because it was adopted as a Senate floor amendment to a House-passed private bill. In 1967, the same year that Section 2c was adopted, Congress had contemplated, but failed to pass, a more comprehensive bill that would have repealed Section 2a(c), thereby removing the apparent statutory inconsistencies. Addressing the tension between Section 2a(c) and Section 2c, as applied to a Mississippi redistricting plan, the Supreme Court in Branch v. Smith held that a federal district court was required to craft single-member districts. Although the issue remains unsettled, it appears that Section 2a(c) could provide options to the House of Representatives to seat an at-large delegation. H.R. 415 (108th Cong.), would establish a commission to make recommendations on the method by which Members of the House are elected, including examining alternatives to the current method. Such recommendations, if ultimately enacted, could affect current federal statutory provisions governing single-member and at-large representation in the House of Representatives.

The Congressional Budget Act establishes the budget resolution as a central coordinating mechanism for budgetary decision making. The budget resolution creates enforceable parameters with which spending, revenue, and debt legislation must be consistent. It is not a law. It is not signed by the President nor can it be vetoed. Instead, its purpose is to establish a framework within which Congress considers legislation dealing with spending and revenue. The budget resolution is not intended to establish details of spending or revenue policy. Instead, details of such policy, and legislative language to implement it, are to be included in legislation reported from the committees with legislative jurisdiction subsequent to the adoption of the budget resolution. All spending or revenue legislation reported from legislative committees, however, is expected to be consistent with the levels and priorities agreed to in the budget resolution. The spending policies in the budget resolution encompass two types of spending legislation: discretionary spending and direct (or mandatory) spending. Discretionary spending is controlled through the appropriations process. Appropriations legislation is considered annually for the fiscal year beginning October 1. Appropriations legislation provides funding for numerous activities such as national defense, education, and homeland security, as well as general government operations. Direct spending, alternately, is provided for in legislation outside of appropriations acts. Direct spending programs are typically established in permanent law that continue in effect until such time as they are revised or terminated by another law. The actual annual cost of direct spending is not determined by Congress. It is instead dictated by formulas within the legislation providing for the program. The overall cost of a program depends on the eligibility requirements and benefits set forth in the legislation. These criteria determine who will be eligible to receive benefits and how much benefit they will receive. Only by altering these formulas can Congress adjust how much money will be spent. On March 25, the House Budget Committee marked up and voted to report the House version of the FY2010 budget resolution ( H.Con.Res. 85 , H.Rept. 111-60 ) by a vote of 24-15. During markup, the committee considered 30 amendments to the chairman's mark: one amendment was adopted, 27 amendments were rejected, and two amendments were withdrawn. The Senate Budget Committee considered and marked up the Senate version of the FY2010 budget resolution over the course of two days, March 25 and 26. The Committee voted to report S.Con.Res. 13 by a vote of 13-10. During markup, the committee considered 27 amendments to the chairman's mark: 15 amendments were adopted and 12 amendments were rejected. The House and Senate consider the budget resolution under procedures generally intended to expedite final action. In the House, the budget resolution usually is considered under a special rule, limiting the time of debate and allowing only a few amendments, as substitutes to the entire resolution. On April 1 and 2, the House considered H.Con.Res. 85 under two special rules reported by the House Rules Committee. The first rule ( H.Res. 305 , H.Rept. 111-70 ) provided for four hours general debate only. The second rule ( H.Res. 316 , H.Rept. 111-73 ) made in order the four amendments in the nature of a substitute printed in the House Rules Committee report. During consideration of the FY2010 budget resolution, the House rejected the four amendments made in order by the special rule. The House subsequently agreed to H.Con.Res. 85 by a vote of 233-196. The Senate considers the budget resolution under the procedures set forth in the Budget Act, sometimes as modified by a unanimous consent agreement. Debate on the initial consideration of the budget resolution, and all amendments, debatable motions, and appeals, is limited to 50 hours. Amendments, motions, and appeals may be considered beyond this time limit, but without debate. (Consideration of the conference report is limited to 10 hours.) The Senate considered its version of the FY2010 budget resolution over the course of four days, March 30-April 2. During consideration of S.Con.Res. 13 , the Senate considered 121 amendments: 101 amendments were adopted, 17 amendments were rejected, and three amendment fell on a point of order. On April 2, the Senate agreed to S.Con.Res. 13 , as amended, by a 55-43 vote. After resolving the differences between their respective versions, the House and Senate agreed to the conference report to accompany the FY2010 budget resolution ( S.Con.Res. 13 , H.Rept. 111-89 ) by votes of 233-193 and 53-43, respectively, on April 29. The budget resolution sets forth levels for new budget authority, outlays, revenue, and public debt for the budget year and four outyears. The levels in the budget resolution deal with aggregates, not programmatic spending details. Assumptions concerning some major programs may be discussed in the reports accompanying the budget resolution, but these assumptions are not in the form of legislative language and are not binding on the committee of jurisdiction. The House budget resolution provided for revenue levels of $2,328 billion and outlays of $3,550 billion in FY2010, differing slightly from the Senate budget resolution levels of $2,288 billion in revenues and $3,534 billion in outlays. The House budget resolution also included reconciliation instructions to allow for health care and education initiatives, while the Senate did not include any reconciliation instructions. There were some other differences in the House and Senate budget resolutions, including assumptions regarding future legislation concerning estate tax rates and the number of years for which the alternative minimum tax (AMT) would be patched, as well as the number of reserve funds. A budget resolution conference agreement was filed on April 27, 2009 and included $2,322 billion in revenues and $3,555 billion in outlays for FY2010, resulting in a projected deficit of $1,233 billion. By FY2014, the budget resolution cuts the projected deficit by half to $523 billion. The conference agreement passed both the House and Senate on April 29, 2009. The budget resolution includes programmatic totals broken out by 21 functional categories. Though these amounts are non-binding, these funds are later allocated to House and Senate committees in order to create department and programmatic spending totals for the upcoming fiscal year. An amount of $130 billion in new budget authority is provided for overseas deployment and other activities (i.e., war costs). It is inevitable that Members will consider the impact on particular programs or agencies when they consider a budget resolution. Each committee is required to submit its "views and estimates" with information on the preferences and legislative plans of that committee regarding budget matters to help the Budget Committee develop appropriate spending levels for each of the functional categories. While the budget resolution does not allocate funds among specific agencies or programs, assumptions underlying the amounts set forth in the functional categories are frequently discussed in the reports accompanying the budget resolution. Report language, however, is not binding on the committees with jurisdiction over spending and revenue. In addition, provisions included in the budget resolution also indicate programmatic assumptions or desires. S.Con.Res. 13 includes "Policy" and "Sense of the Congress" language expressing the assumptions and desires of the chambers for certain programs to receive priority in funding. Title V of S.Con.Res. 13 is made up of two sections each indicating that the budget resolution supports certain policy. The first section refers to policy on middle-class tax relief and assumes three additional years of AMT relief (through FY2014), a two-year extension of expired and expiring tax provisions, and a new incentive for retirement savings. The agreement supports the permanent extension of tax relief first enacted in 2001 and 2003 for middle-income taxpayers (the resolution does assume the expiration of the current top two income tax rates, which will rise to 36 percent and 39.6 percent in 2011) and the continuation of current estate tax rates. The second section describes a number of specific defense priorities, such as military healthcare and pay and benefits, and troop readiness. Title VI of S.Con.Res. 13 is comprised of seven "Sense of the Congress" provisions related to a wide spectrum of issues including veterans and servicemembers' health care, homeland security, American innovation and economic competitiveness, pay parity, college affordability and student loan reform, great lakes restoration, and child support enforcement. Neither "Sense of the Congress" provisions nor "Policy" statements are binding on the committees with jurisdiction over spending and revenue, although committees may be influenced by them. Rather than including levels of spending for specific agencies or programs, the budget resolution establishes congressional priorities by dividing spending among the 21 major functional categories of the federal budget. These 21 functional categories do not correspond to the committee system by which Congress operates. As a result, the spending levels in the 21 functional categories are allocated, or "crosswalked," to the House and Senate committees having jurisdiction over discretionary spending (appropriations committees) and direct spending (legislative committees). These "crosswalked" totals appear in the joint explanatory statement of the conference report on the budget resolution and are referred to as 302(a) allocations. These 302(a) amounts hold committees accountable for staying within the spending limits established by the budget resolution. The 302(a) allocations made to the House and Senate Appropriations Committees reflect their jurisdiction over all discretionary spending. These allocations hold the appropriations committees accountable for staying within the spending limits established by the budget resolution. An additional restraint is placed on discretionary spending limits by Sec. 401 of S.Con.Res. 13 . Sec. 401 established a point of order limiting discretionary spending in the Senate to $1,391,471,000,000 in new budget authority and $1,220,843,000,000 in outlays for 2 009; and, $1,086,021 ,000,000 in new budget authority and $1,307,240 ,000,000 in outlays for 2010. Both the House and Senate Appropriations Committees have 12 subcommittees. Each of these subcommittees is responsible for reporting one regular appropriations bill. Sometimes these bills are packaged together in what is referred to as an omnibus appropriations act. The Appropriations Committee is now responsible for subdividing their committee allocation among their subcommittees as soon as practicable. These suballocations are known as 302(b) subdivisions. The appropriations committees may make allocations among subcommittees, even if they do not correspond with the levels set forth in the functional categories of the budget resolution. Section 302(c) of the Budget Act provides a point of order against the consideration of any appropriations measures before the Appropriations Committee reports its subdivisions. The Appropriations Committees are then required to report these subdivisions to their respective chambers. The Appropriations Committees may revise the 302(b) subdivisions anytime during the appropriations process to reflect actions taken on spending legislation. If an Appropriations Committee does adjust the subdivisions among subcommittees, it must inform its respective chamber of the new levels by issuing a new 302(b) subdivision report. Section 302(f) of the Budget Act prohibits consideration of any measure or amendment that would cause the 302(a) or 302(b) allocations to be exceeded. Since appropriations subcommittees usually report their bills at the maximum level of spending, amendments offered to the appropriations bill on the floor are often vulnerable to being ruled out of order since they would cause the spending to exceed the 302(b). House and Senate legislative committees also receive 302(a) allocations that reflect their jurisdiction over direct spending programs. Any legislation reported by these committees must be consistent with these allocations. As with discretionary spending, Section 302(f) prohibits the consideration of any measure or amendment that would cause the 302(a) allocation to be exceeded. The budget resolution also provides for new budget authority for direct spending, though these levels are based on policies in current law and not allocated by the appropriations committees. Mandatory spending for FY2010 totals $2,218 billion, mostly in the functional categories for Health, Medicare, Income Security, and Social Security. Points of order can effectively limit spending that results from appropriations acts or new entitlement legislation to levels consistent with the budget resolution, but are not an effective means for reducing spending that results from existing laws providing direct spending. As a result, Congress has established the reconciliation process as a way to instruct committees to develop legislation to change current revenue or direct spending laws so that these programs conform with policies established in the budget resolution. The reconciliation process is an optional two-stage process in which instructions are included in the budget resolution. Reconciliation instructions are in the form of a directive to a specific committee to recommend legislative changes. These instructions are specific and include (1) the committee responsible for making the change, (2) the dollar amount of the change, and (3) the period over which this change should be measured. Reconciliation instructions also include a deadline for the committee to submit such recommendations. Although reconciliation instructions are not binding in terms of specific policy requirements, S.Con.Res. 13 provides the reconciliation instructions below to House and Senate committees. The instructions allow for health care and education reform initiatives, and direct the committees of jurisdiction in the House and Senate to submit legislative language to their respective Budget Committees by October 15, 2009. SEC. 201. RECONCILIATION IN THE SENATE. (a) Committee on Finance- The Senate Committee on Finance shall report changes in laws within its jurisdiction to reduce the deficit by $1,000,000,000 for the period of fiscal years 2009 through 2014. (b) Committee on Health, Education, Labor, and Pensions- The Senate Committee on Health, Education, Labor, and Pensions shall report changes in laws within its jurisdiction to reduce the deficit by $1,000,000,000 for the period of fiscal years 2009 through 2014. (c) Submissions- In the Senate, not later than October 15, 2009, the Senate committees named in subsections (a) and (b) shall submit their recommendations to the Senate Committee on the Budget. Upon receiving all such recommendations, the Senate Committee on the Budget shall report to the Senate a reconciliation bill carrying out all such recommendations without any substantive revision. SEC. 202. RECONCILIATION IN THE HOUSE. (a) Health Care Reform- (1) The House Committee on Energy and Commerce shall report changes in laws to reduce the deficit by $1,000,000,000 for the period of fiscal years 2009 through 2014. (2) The House Committee on Ways and Means shall report changes in laws to reduce the deficit by $1,000,000,000 for the period of fiscal years 2009 through 2014. (3) The House Committee on Education and Labor shall report changes in laws to reduce the deficit by $1,000,000,000 for the period of fiscal years 2009 through 2014. (b) Investing in Education- The House Committee on Education and Labor shall report changes in laws to reduce the deficit by $1,000,000,000 for the period of fiscal years 2009 through 2014. (c) Submissions- In the House, not later than October 15, 2009, the House committees named in subsections (a) and (b) shall submit their recommendations to the House Committee on the Budget. Upon receiving all such recommendations, the House Committee on the Budget shall report to the House a reconciliation bill carrying out all such changes without any substantive revision. The legislative language recommended by committees will be packaged "without any substantive revision" into a reconciliation bill by the House and Senate Budget Committees. Once reported, reconciliation legislation is considered under special procedures on the House and Senate floor. Spending allocations may be revised subsequent to the adoption of the budget resolution if provided for in the budget resolution. Congress frequently includes provisions referred to as "reserve funds" in the annual budget resolution, which provide the chairs of the House and Senate Budget Committees the authority to adjust the committee spending allocations if certain conditions are met. Typically these conditions consist of legislation dealing with a particular policy being reported by the appropriate committee or an amendment dealing with that policy being offered on the floor. Once this action has taken place, the Budget Committee chairman submits the adjustment to his respective chamber. Title III of S.Con.Res. 13 is composed of 34 reserve funds, 20 of which appear under Subtitle A and apply only to the Senate. There are 14 reserve funds in Subtitle B that apply only to the House. These reserve funds include policies such as education, energy, healthcare, and tax relief. All of the reserve funds in S.Con.Res. 13 require that the net budgetary impact of the specified legislation be deficit neutral. Deficit-neutral reserve funds provide that a committee may report legislation with spending in excess of its allocations, but require the excess amounts be "offset" by equivalent amounts. The Budget Committee chairman may then increase the committee spending allocations by the appropriate amounts to prevent a point of order under Section 302 of the Budget Act. In addition to the Senate discretionary spending limit described above, Title IV of S.Con.Res. 13 includes a number of provisions concerning budget enforcement. These provisions include limit on advance appropriations, emergency spending, legislation increasing the short term deficit and legislation related to surface transportation funds.

The Congressional Budget Act establishes the budget resolution as a central coordinating mechanism for budgetary decision making. The budget resolution sets forth aggregate levels of spending, revenue, and public debt. It is not intended to establish details of spending or revenue policy and does not provide levels of spending for specific agencies or programs. Instead, its purpose is to create enforceable parameters within which Congress can consider legislation dealing with spending and revenue. The spending policies in the budget resolution encompass two types of spending legislation: discretionary spending and direct (mandatory) spending. Discretionary spending is controlled through the appropriations process. Appropriations legislation is considered each fiscal year and provides funding for numerous programs such as national defense, education, and homeland security. Direct spending, alternately, is provided for in legislation outside of appropriations acts. Direct spending programs are typically established in permanent law and continue in effect until such time as revised or terminated by another law. The FY2010 budget resolution establishes congressional priorities by dividing spending among 21 major functional categories. These 21 categories do not correspond to the committee system by which Congress operates, and as a result these spending levels must be "crosswalked" to the House and Senate committees having jurisdiction over both discretionary and direct spending. These amounts are known as 302(a) allocations and hold committees accountable for staying within the spending limits established by the budget resolution. The House Budget Committee approved its budget resolution (H.Con.Res. 85) on March 25, 2009, on a 24-15 vote. The Senate Budget Committee approved its budget resolution (S.Con.Res. 13) the next day on a 13-10 vote. The House (on a 233-196 vote) and Senate (on a 55-43 vote) agreed to their versions of the budget resolution on April 2, 2009. The conference agreement on the budget resolution (S.Con.Res. 13) was passed in the House (on a 233-193 vote) and in the Senate (on a 53-43 vote) on April 29, 2009. This report summarizes some of the major provisions of S.Con.Res. 13, including overall spending and revenue totals, reconciliation instructions, and policy assumptions. It will be updated as circumstances warrant.

S tates and localities can have significant interest in the manner and extent to which federal officials enforce provisions of the Immigration and Nationality Act (INA) regarding the exclusion and removal of unauthorized aliens. Some states and localities, concerned that federal enforcement disrupts families and communities, or infringes upon human rights, have adopted "sanctuary" policies limiting their cooperation in federal efforts. Other states and localities, in contrast, concerned about the costs of providing benefits or services to unauthorized aliens, or such aliens settling in their communities, have adopted measures to deter unauthorized aliens from entering or remaining within their jurisdiction. In some cases, such states or localities have also sued to compel federal officials to enforce the immigration laws, or to compensate them for costs associated with unauthorized migration. This report provides an overview of challenges by states to federal officials' alleged failure to enforce the INA or other provisions of immigration law. It begins by discussing (1) the lawsuits filed by six states in the mid-1990s; (2) Arizona's counterclaims to the federal government's suit to enjoin enforcement of S.B. 1070; and (3) Mississippi's challenge to the Deferred Action for Childhood Arrivals (DACA) initiative. It then describes the challenge brought by over 25 states or state officials in December 2014 to the Obama Administration's proposal to expand DACA and create a similar program for unauthorized aliens whose children are U.S. citizens or lawful permanent resident aliens (LPRs) (commonly known as DAPA). The report does not address challenges to the federal government's alleged failure to enforce the immigration laws that have been made by other parties, including private individuals, municipal officials, or, in one case, the people of a state (although not the state itself). But see CRS Legal Sidebar WSLG1145, "Sheriff Joe" Found to Lack Standing to Challenge the Obama Administration's Immigration Enforcement Priorities and Deferred Action Initiatives , by [author name scrubbed]. In the mid-1990s, six states which were then home to over half the unauthorized aliens in the United States --Arizona, California, Florida, New Jersey, New York, and Texas--each challenged the federal government's "fail[ure] to control illegal immigration." Each case raised somewhat different issues. However, all resulted in losses for the states both before the reviewing federal district court and on appeal. Limitations on standing--or who is a proper party to seek judicial relief from a federal court--were noted in some cases. However, even when standing was assumed, the states' constitutional and statutory claims failed, as discussed below. The following sections discuss how the courts viewed the most notable arguments made in the 1990s litigation, including those based on the Naturalization, Guarantee, and Invasion Clauses of the U.S. Constitution; the Tenth Amendment; and provisions of the INA. Several states claimed that the federal government's alleged failure to enforce the immigration laws imposed disproportionate costs upon them, which the federal government was obligated to reimburse pursuant to the Naturalization Clause. This clause--which has been recognized as one source of the federal government's authority to regulate immigration --expressly grants Congress the "Power ... [t]o establish a uniform Rule of Naturalization." The states' reasoning appears to have been that, insofar as the rule of naturalization is to be "uniform," the effects of immigration upon the states must also be uniform and, if they are not, the federal government has an affirmative duty to compensate those states that can be seen as disproportionately affected by immigration. However, ignoring the question of whether Congress's power over immigration is, in fact, co-extensive with its power over naturalization, the U.S. Courts of Appeals for the Second, Third, and Ninth Circuits found that the Naturalization Clause imposes no obligation upon the federal government to reimburse the states for any costs arising from an alleged "invasion" by unauthorized aliens, or to protect the states from harm by "non-governmental third parties." To the contrary, as the Second Circuit noted, the Supreme Court has upheld the federal government's exercise of its "plenary powers"--which include immigration --"even though the effects of such exercises of power may be onerous to the states." The courts similarly rejected the states' claims that the federal government violated the Guarantee Clause by failing to compensate them for their "immigration-related expenditures." The Guarantee Clause provides that the "United States shall guarantee to every State in this Union a Republican Form of Government," and the states' argument was essentially that the federal government deprived them of a republican form of government by "forcing" them to spend money on unauthorized aliens that they would not have had to spend if these aliens had been excluded or removed from the United States. This argument was, however, uniformly rejected by the Second, Third, Fifth, Ninth, and Eleventh Circuits. In some cases, the courts did so by noting that the Supreme Court has generally viewed alleged violations of the Guarantee Clause as involving nonjusticiable "political questions," or questions which are committed to the executive and/or legislative branches, and which lack judicially discoverable and manageable standards for resolving. In other cases, the courts noted that nothing in the state's complaint suggested that the state had been deprived of a republican form of government because the state's "form [and] method of functioning" remained unchanged, and the state's electorate had not been "deprived of the opportunity to hold state and federal officials accountable at the polls for their respective policy choices." Claims that the federal government's alleged failure to enforce the immigration laws violated the Invasion Clause--which requires the federal government to protect the states "against Invasion" --were similarly rejected by the Second, Third, Ninth, and Eleventh Circuits. Most commonly, this was because the courts viewed the legislative and executive branches as having been tasked with determining how the immigration laws are to be enforced, while the judicial branch was seen to lack manageable standards for determining whether or when the entry of unauthorized aliens constituted an "invasion." Several courts also found, in the alternative, that the Invasion Clause was inapplicable because the states were not threatened by incursions of foreign or domestic states. The states' claims that the federal government violated the Tenth Amendment by "forcing" them to provide public benefits and services to unauthorized aliens were also uniformly rejected by the Second, Third, Fifth, Ninth, and Eleventh Circuits. Here, the courts relied upon somewhat different reasoning as to each of the three main types of benefits and services which the states alleged that the federal government had "commandeered." First, as to Medicaid spending, the courts found that the states had agreed to provide certain emergency medical services to unauthorized aliens as a condition of states' receipt of federal funds. Such conditions, in the courts' view, represented a permissible exercise of Congress's spending power, rather than impermissible commandeering. Second, as to the costs of incarcerating unauthorized aliens, the courts noted that these aliens were jailed pursuant to state law, rather than any dictates of the federal government and, thus, they found no commandeering. Third, and finally, as to elementary and secondary education, the courts noted that the states were obligated to provide such education to unauthorized alien children as a result of the Constitution, as construed by the Supreme Court in Plyler v. Doe , and not as the result of a command of the federal government. Thus, in the courts' view, this, too, did not represent commandeering. The states' statutory claims--alleging that federal officials violated specific provisions of the INA or other statutes by failing to exclude or remove unauthorized aliens, or compensate the states for the costs associated with such aliens--were no more successful than their constitutional arguments. The states cited a number of provisions in support of these claims, including Section 103(a)(5) of the INA, which at that time tasked the Attorney General with the "duty to control and guard the boundaries and borders of the United States against the illegal entry of aliens" ; the former Section 1252(a)(2)(A) of Title 8 of the U.S. Code , which called for the Attorney General to take any alien convicted of an aggravated felony into custody upon the alien's release from state custody or supervision; the former Section 1252(c) of Title 8 of the U.S. Code , which established a six-month period following the issuance of a final order of removal for federal officials to effectuate the alien's departure from the United States; the former Section 1252( l ) of Title 8 of the U.S. Code , which directed the Attorney General to begin deportation proceedings for aliens convicted of deportable offenses "as expeditiously as possible after the date of conviction"; Section 276 of the INA, which establishes criminal penalties for "illegal reentry" (i.e., unlawfully re-entering the United States after having been removed); and Section 1365 of Title 8 of the U.S. Code , which provides for the reimbursement of costs incurred by the states for the imprisonment of unauthorized aliens or Cuban nationals who have been convicted of felonies. However, all the states' claims were seen to involve matters that were committed to agency discretion as a matter of law and, thus, not reviewable by the courts. Notably, all the statutes cited by the states in making these claims included the word "shall." In no case, though, did an appellate court specifically address the statute's use of this word, or whether "shall" could be construed to indicate mandatory agency action, in its published decision. This was so even when the provision of immigration law in question did not, in itself, include language which clearly evidenced that federal officials had some discretion in enforcing the law. It should also be noted that, in three of the six cases, the appellate court expressly rejected the suggestion that federal officials' alleged failure to enforce the immigration laws could be seen as an "abdication" of their statutory responsibilities. The Supreme Court's 1985 decision in Heckler v. Chaney expressly recognized an exception to the presumption that agency decisions not to undertake enforcement actions are "committed to agency discretion by law" and, thus, immune from judicial review under the Administrative Procedure Act (APA). This exception would permit review when "the agency has 'consciously and expressly adopted a general policy' [of nonenforcement] that is so extreme as to amount to an abdication of its statutory responsibilities." However, the federal courts of appeals found that the federal government's immigration enforcement policies in the mid-1990s did not constitute such an abdication, apparently because the states could not allege that the federal government was "doing nothing" to enforce the immigration laws. Instead, in the courts' view, the states questioned the effectiveness of federal policies and practices, and "[r]eal or perceived inadequate enforcement of immigration law does not constitute a reviewable abdication of duty." In 2011, over a decade after the mid-1990s litigation, Arizona asserted counterclaims challenging the federal government's alleged failure to enforce the immigration laws in the litigation over Arizona's Support Our Law Enforcement and Safe Neighborhoods Act (commonly known as "S.B. 1070"). Arizona had adopted S.B. 1070 in 2010 in an attempt to deter unauthorized aliens from settling in the state by requiring that state and local police check the immigration status of all persons whom they stop, arrest, or detain. S.B. 1070 also made it a state crime to engage in certain conduct thought to facilitate the presence of unauthorized aliens within the state. The federal government sought to enjoin enforcement of S.B. 1070 on the grounds that it was preempted by federal law. Arizona responded, in part, by alleging that federal policies and practices as to immigration enforcement ran afoul of various provisions of the Constitution and federal statute. In particular, Arizona alleged that federal officials had violated the Invasion and Domestic Violence Clauses, as well as the Tenth Amendment, by, respectively, failing to protect Arizona from "invasion" by aliens unlawfully entering the United States and "refusing" to reimburse the state for the "costs and damages associated with illegal immigration in Arizona." Arizona also alleged that federal officials had failed to comply with statutory mandates to achieve and maintain "operational control" of the Arizona-Mexico border, pursue and effectuate the removal of unauthorized aliens who are found within the interior of the United States, and reimburse states for the costs of detaining "criminal aliens" pursuant to the State Criminal Alien Assistance Program (SCAAP). The federal government challenged Arizona's standing to raise all of these claims other than that as to reimbursement pursuant to SCAAP. However, the reviewing federal district court "presum[ed]" that Arizona had standing because (1) the federal government did not question whether "illegal immigration" constituted an injury in fact; (2) Arizona had alleged facts indicating that unauthorized aliens' conduct and choices in crossing into Arizona were directly influenced by federal policies and practices; and (3) ordering the federal government to "deploy ... temporary measures" to secure the border would provide Arizona "some relief." Arizona did not fare as well on the merits of its arguments. The reviewing federal district court first found that Arizona's claims as to the Invasion Clause and the Tenth Amendment were precluded by the litigation in the mid-1990s, or, alternatively, settled in the federal government's favor by Ninth Circuit precedent. The court similarly found that Arizona's remaining constitutional claim--alleging a violation of the Domestic Violence Clause that had not been raised in the mid-1990s litigation--was also settled by Ninth Circuit precedent finding that the clause applies only to "insurrections, riots, and other forms of civil disorder," and not "ordinary crimes." The court also viewed the Domestic Violence Clause as implicating nonjusticiable political questions. The reviewing federal district court then found that Arizona's various statutory claims involved actions that were committed to agency discretion by law and, thus, were not subject to review by the courts. In so finding, the court specifically looked at provisions of immigration law that direct the Secretary of Homeland Security to "take all actions the Secretary determines necessary and appropriate to achieve and maintain operational control" over the U.S. border within 18 months after the enactment of the Secure Fence Act of 2006; prioritize the incarceration of unauthorized "criminal aliens" and reimburse states through SCAAP for the costs of incarcerating such aliens; establish procedures for removing unauthorized aliens apprehended in the interior of the United States; and bar federal, state, and local officials from restricting the sharing of information regarding persons' citizenship or immigration status. However, the court concluded that each provision involved actions that are committed to agency discretion by law. In some cases, the court reached this conclusion because the statute provided no standard by which the court could judge the propriety of federal officials' actions, as with the construction of the border fence, where "no deadline mandates completion of the fencing and infrastructure developments or any required discrete action by a specified time." In other cases, the court noted that the statutes themselves grant federal officials "substantial discretion," as was the case with "determining where to build fencing, where to use alternative infrastructure improvements rather than fencing, and how best to develop a comprehensive program to prevent illegal immigration." In no case did the court, in its published opinion, note the use of "shall" in any of these statutes, or discuss whether this word could be construed to indicate mandatory action. The court further found the specific actions challenged by Arizona--which included prioritizing certain enforcement efforts and "considering changes in the interpretation and enforcement of immigration laws that would 'result in meaningful immigration reform absent legislative action'"--did not constitute an abdication of the Executive's statutory responsibilities. The court did so, in part, because Arizona conceded that federal officials "continue to enforce federal immigration laws in accordance with priorities established by the federal government." Thus, according to the court, while Arizona "disagrees" with federal enforcement priorities, its "allegations do not give rise to a claim that [federal officials] have abdicated their statutory responsibilities." One year later, in 2012, Mississippi raised similar claims about federal officials' alleged failure to enforce the immigration laws when it joined a challenge brought by some U.S. Immigration and Customs Enforcement (ICE) agents to the Obama Administration's Deferred Action for Childhood Arrivals (DACA) initiative. This challenge arose from the Administration's decision to grant some "unauthorized aliens" who had been brought to the United States as children and raised here deferred action--one type of relief from removal--and, in many cases, work authorization. The ICE agents and Mississippi asserted that this initiative violates the Take Care Clause, impinges upon Congress's legislative powers, and contradicts certain provisions in Section 235 of the INA, which some assert require that unauthorized aliens be placed in removal proceedings. They also alleged that it runs afoul of the Administrative Procedure Act (APA) because the Obama Administration did not promulgate regulations before making deferred action--which the plaintiffs viewed as a "benefit," not an exercise of prosecutorial discretion--available to unauthorized aliens who had been brought to the United States as children. The ICE agents were found to have standing to raise these challenges and, at least initially, prevailed before the reviewing federal district court on their claim that DACA runs afoul of three purportedly "interlocking" provisions in Section 235 of the INA which state that 1. any alien present in the United States who has not been admitted shall be deemed an applicant for admission; 2. applicants for admission shall be inspected by immigration officers; and 3. in the case of an alien who is an applicant for admission, if the examining immigration officer determines that an alien seeking admission is not clearly and beyond a doubt entitled to be admitted, the alien shall be detained for removal proceedings. In particular, the court noted that each of the three provisions includes the word "shall," and took the view that "shall" indicates mandatory agency action. However, this same court later found that it lacked jurisdiction over the ICE agents' claims. This finding was affirmed on appeal by the Fifth Circuit in a decision which suggests--but does not directly hold--that the Fifth Circuit may not view Section 235 of the INA as barring the Executive from granting deferred action to unauthorized aliens. Mississippi, in contrast, was found not to have standing because the reviewing court viewed its alleged injury as "conjectural and based on speculation" and, thus, insufficiently concrete to satisfy the constitutional requirements of standing. This injury consisted of the fiscal costs associated with unauthorized aliens residing in the state who were allegedly enabled to remain there as a result of DACA and Obama Administration guidance regarding the exercise of prosecutorial discretion in civil immigration enforcement. The federal government did not contest that the expenditure of state funds could qualify as an invasion of a legally protected interest sufficient to establish standing under the "proper circumstances." Rather, the federal government argued that such circumstances were not present in the instant case because Mississippi relied upon a 2006 report--which pre-dated DACA--to show the costs it incurred as the result of the Obama Administration's actions. The district court agreed, and also noted that Mississippi had offered only "conclusory allegations" that the unauthorized aliens granted deferred action would have been removed but for the DACA initiative, or that DACA had resulted in a decrease in the total number of aliens removed by the federal government. The district court's decision as to Mississippi's standing was affirmed by the Fifth Circuit on appeal. In so doing, the Fifth Circuit noted that it viewed Mississippi's alleged injury as "purely speculative" because it "is not supported by any facts" showing that Mississippi's costs increased, or will increase, as a result of DACA. One judge did, however, issue a concurring opinion which emphasized that concrete evidence that an injury has occurred or will occur is not necessary for standing for certain types of claims, but did not view Mississippi as making such claims. Most recently, in December 2014, over 25 states or state officials filed suit challenging the Obama Administration's announcement that it is expanding the DACA program to cover additional aliens who had been brought to the United States as children, and creating a DACA-like program for unauthorized aliens who are the parents of U.S. citizens or LPRs (commonly known as DAPA). In particular, the states assert that these new programs violate the Take Care Clause and separation of powers principles of the Constitution, federal immigration law, and substantive and procedural requirements of the APA. The federal government disputes these assertions. It also maintains that the plaintiffs lack standing, and that the challenged programs represent an exercise of enforcement discretion and, as such, are immune from judicial review. In a decision issued on February 16, 2015, the U.S. District Court for the Southern District of Texas found that the states have standing to challenge DAPA and the DACA expansion, and that the challenged programs are judicially reviewable. It also imposed a preliminary nationwide ban on the implementation of these programs after finding that the states are likely to prevail on the merits of their argument that the memorandum establishing the programs constitutes a substantive rule, but was issued without compliance with the notice-and-comment procedures required for such rules under the APA. The federal government filed an emergency expedited motion to stay the injunction with the district court, which was denied because the district court viewed its "original findings and rulings" as "correct." The federal government also appealed the district court's decision regarding standing, reviewability, and the procedural requirements of the APA to the Fifth Circuit. The government requested that the Fifth Circuit stay the injunction pending resolution of this appeal. On May 26, 2015, the Fifth Circuit issued a decision rejecting, by a vote of 2 to 1, the federal government's request for the stay because it viewed the federal government as failing to make the requisite showing that it was likely to succeed on the merits of its arguments that (1) the states lack standing; (2) DAPA and the DACA expansion are not subject to judicial review; and (3) the memorandum establishing the challenged programs constitutes an interpretative rule, not a substantive one. Subsequently, on November 9, 2015, the Fifth Circuit denied, again by a vote of 2 to 1, the government's appeal, in part, because it agreed with the district court's reasoning in finding that the states have standing to challenge DAPA and the DACA expansion, the programs are judicially reviewable, and their establishment represents a substantive rule that should have been subject to notice-and-comment rulemaking. However, the Fifth Circuit also went beyond the district court's analysis in finding that DAPA and the DACA expansion are impermissible because they conflict with provisions of the INA or, alternatively, represent unreasonable interpretations of the INA. The Supreme Court granted the federal government's petition for review of the Fifth Circuit's decision. However, an evenly divided Supreme Court ultimately issued a decision that, consistent with recent practice, affirmed the Fifth Circuit's decision without any opinion or indication of the Justices' voting alignment. This means that the preliminary nationwide ban on the implementation of DAPA and the DACA expansion that the district court imposed in February 2015, when it granted the states' motion for a preliminary injunction, remains in place, at least for now. The district court continues to hear arguments on whether to permanently enjoin implementation of these programs. In affirming the district court on the questions of standing, reviewability, and the need for rulemaking, the majority of the Fifth Circuit did not significantly add to or alter the district court's analysis. In particular, as to standing, the majority noted that Texas satisfied the requirements for constitutional, Article III standing, as well as those for prudential standing--an additional hurdle for claims brought under the APA. Relying on Massachusetts v. EPA , the majority first noted that the plaintiff-states are entitled to "special solicitude" in the court's standing inquiry. As for constitutional standing, the majority concluded that if DAPA, in particular, were implemented, Texas would suffer a concrete injury because the state would incur "significant costs" by having to issue state-subsidized driver's licenses to DAPA beneficiaries. With regard to prudential standing, the majority concluded that Texas's interest in denying public benefits to "illegal aliens"--something which Congress generally requires, absent the enactment of a state law that expressly provides for their eligibility --falls within the "zone of interests" regulated by the INA. The dissent, however, characterized the majority's standing analysis as "deeply troublesome," noting, in particular, separation of powers concerns because, in the dissenting judge's view, the majority ruling would "inject courts into far more federal-state disputes and review of the political branches." Concerning the court's authority to review DAPA and the DACA expansion, the majority recognized that there are limitations to judicial review of specific decisions of the Secretary of Homeland Security, but concluded that none of those limitations pertains to the decision to grant "lawful presence" to millions of aliens. The majority also concluded that it can review DAPA and the DACA expansion to determine whether the Executive exceeded its statutory powers because these programs affirmatively confer lawful presence on aliens who entered or remained in the United States in violation of the immigration laws, as well as permit them to receive authorization to work in the United States. These programs are thus not tantamount to agency decisions not to take enforcement action, in the majority's view. The dissent, though, disagreed that this was a basis for review, reasoning that the ability of deferred action beneficiaries to apply for work authorization is not a function of DAPA but of decades-old regulations whose permissibility was not challenged by the plaintiff-states. The majority also affirmed the district court's ruling that DAPA and the DACA expansion should have been implemented through notice-and-comment rulemaking pursuant to the APA. The majority did so, in part, because it viewed the programs as legally binding, not as a policy statement. It found no error in the lower court's factual finding that, although the memorandum announcing DAPA and the DACA expansion "facially purports to confer discretion," that discretion is "merely pretext," given the low rate of rejection in the 2012 DACA program and the provisions made for handling DAPA applications (a conclusion which the dissenting judge would have found clearly erroneous). The majority similarly found that DAPA is not a procedural rule, since it establishes substantive standards by which applications for deferred action are evaluated. The majority went beyond the district court's ruling, however, in finding that DAPA and the DACA expansion violate the APA substantively, as well as procedurally, because they are "not in accordance with the law" and "in excess of statutory ... authority." In so doing, the majority noted Fifth Circuit precedent that it "may affirm a district court's judgment on any grounds supported by the record." It further noted that it assumed that the permissibility of DAPA and the DACA expansion should be addressed under the precedent of Chevron USA, Inc. v. Natural Resources Defense Council , which calls for courts to defer to agency interpretations of their governing statutes where Congress has not "directly spoken to the precise question at issue," and the agency's interpretation of an ambiguous statute is a reasonable one. The majority found, however, that Congress has spoken to the precise questions at issue here in such a way as to preclude DAPA and the DACA expansion. In particular, it pointed to the INA's provisions regarding (1) which aliens may lawfully enter and remain in the United States, (2) discretionary relief from removal, and (3) work authorization. For example, it noted that DAPA would treat aliens who entered or remained in the United States in violation of federal immigration law and are the parents of U.S. citizens or LPRs as "lawfully present," while the INA permits "illegal aliens to derive a lawful immigration classification from their children's immigration status" only if the child is a U.S. citizen (not an LPR) who is at least 21 years of age, and the alien leaves the United States and waits at least 10 years before applying for one of a limited number of family-preference visas. Alternatively, the majority found that even if Congress is not seen to have spoken on the precise questions at issue, the Executive's interpretation is "unreasonable" because it is "manifestly contrary" to the INA provisions previously noted. The majority further noted the "major policy" exception to Chevron deference--which is based on the view that Congress does not intend to delegate policy decisions "of economic and political magnitude to an administrative agency" when enacting an ambiguous statute--in finding DAPA and the DACA expansion impermissible. It also rejected the view that DAPA and the DACA expansion are grounded in historical practices to which Congress can be seen to have acquiesced by not taking action to bar the practices. The dissenting judge, in contrast, would not have reached the question of whether DAPA and the DACA expansion substantially violate the APA, given that the district court had "expressly declined" to do so, and the Fifth Circuit had received what the dissenting judge viewed as "limited briefing" on the issue. The Supreme Court's 4-4 split in United States v. Texas leaves in place a Fifth Circuit decision that upheld a preliminary nationwide ban on the implementation of DAPA and the DACA expansion, and that could complicate certain executive actions as to immigration in the future (e.g., relatively large-scale grants of deferred action, parole in place, extended voluntary departure, or other relief from removal that would result in aliens being deemed "lawfully present" and obtaining work authorization). In other contexts, though, states' ability to challenge alleged federal "failures" to enforce the immigration laws in the future may be more limited than it might first appear. The 2015 litigation in Texas does mark the first time that a state has obtained a court order directing the federal government to take certain actions (i.e., delaying implementation of DAPA and the DACA expansion) in response to state allegations that the federal government is failing to enforce the INA. On the other hand, the facts and circumstances involved in the 2015 Texas litigation are arguably distinguishable from those in earlier cases and, thus, potentially limit this decision's relevance to any future state challenges to federal enforcement of the immigration laws. First, there are the specific facts and circumstances which prompted the reviewing courts to find that Texas, in particular, has Article III standing to challenge DAPA and the DACA expansion. This finding was based, in part, on Texas's documentation of the costs it would incur in issuing driver's licenses to DAPA beneficiaries. Moreover, because the federal government had advocated a position in prior litigation over the issuance of driver's licenses to DACA beneficiaries that Texas asserted would result in the federal government requiring it to issue driver's licenses to DAPA beneficiaries , Texas could counter the argument that these costs arose due to state law or the Constitution, and not the federal government's actions. Both factors were arguably significant, particularly to the district court. Mississippi's alleged injury in the Crane litigation, for example, was seen as inadequate for standing because Mississippi did not show that the implementation of DACA had increased, or would increase, its costs. Certain claims in the mid-1990s litigation similarly failed because the states were seen as incurring specific costs associated with unauthorized aliens because of grant conditions (to which the state had agreed), state laws, or constitutional requirements, and not the dictates of the federal government. Second, and relatedly, there is the specific form that the federal government's alleged failure to enforce the immigration laws took in the 2015 Texas decision. Namely, the Obama Administration proposed to grant deferred action (one type of relief from removal) to certain unauthorized aliens, a proposal which could result in those aliens becoming eligible for certain "benefits" under existing law (e.g., work authorization, Social Security numbers). In finding that this particular form of nonenforcement of the immigration laws is subject to judicial review, both the district court and the majority of the Fifth Circuit emphasized that they view the granting of deferred action as involving an "affirmative action" on the Executive's part, and not simply a matter of an agency's enforcement priorities, or nonenforcement of the laws as to individual aliens and groups of aliens. Both of these (i.e., enforcement priorities, nonenforcement as to individuals) would appear to be within the Executive's discretion, in the courts' view, and thus not subject to judicial review. Indeed, the district court even suggested, in denying the federal government's emergency expedited motion to stay the injunction, that immigration officials could achieve their purpose of designating potential DAPA beneficiaries as "low priorities" for removal by giving them written documentation to this effect, so long as this documentation does not involve a grant of deferred action.

States and localities can have significant interest in the manner and extent to which federal officials enforce provisions of the Immigration and Nationality Act (INA) regarding the exclusion and removal of unauthorized aliens. Depending upon the jurisdiction's specific concerns, this interest can be expressed in various ways, from the adoption of "sanctuary" policies limiting the jurisdiction's cooperation in federal enforcement efforts to the enactment of measures to deter unauthorized aliens from entering or remaining within the jurisdiction. In some cases, states or localities have also sued to compel federal officials to enforce the INA and other relevant laws. In the mid-1990s, six states which were then home to over half the unauthorized aliens in the United States--Arizona, California, Florida, New Jersey, New York, and Texas--each filed suit alleging that federal officials' failure to check unauthorized migration violated the Guarantee and Invasion Clauses of the Constitution, the Tenth Amendment, and provisions of the INA. Concerns regarding standing--or who is a proper party to seek relief from a federal court--were sometimes noted. However, even when standing was assumed, the constitutional claims were seen to involve nonjusticiable "political questions," or failed on their merits. The states' statutory claims were similarly seen to involve matters committed to agency discretion by law and, thus, not reviewable by the courts. In three cases, the courts also noted that federal officials' alleged failure to control unauthorized migration did not constitute a reviewable "abdication" of their statutory duties. Over a decade later, in 2011, Arizona asserted counterclaims challenging the federal government's alleged failure to stop unauthorized migration in the litigation over Arizona's S.B. 1070 measure. Although the court presumed that Arizona had standing, it rejected Arizona's claims regarding violations of the Invasion and Domestic Violence Clauses, Tenth Amendment, and immigration laws. Some claims were seen as precluded or otherwise settled by the earlier litigation. Others were found to involve nonjusticiable political questions, or otherwise failed. The court also rejected the argument that federal officials had abdicated their statutory duties. Subsequently, in 2012, Mississippi, along with some U.S. Immigration and Customs Enforcement agents, challenged the Obama Administration's Deferred Action for Childhood Arrivals (DACA) initiative on the grounds that it runs afoul of the Take Care Clause, separation of powers, INA, and Administrative Procedure Act (APA). The ICE agents initially prevailed in their claim that DACA is contrary to the INA, although their case was ultimately dismissed on other grounds. However, Mississippi was found to lack standing because it could not show that aliens granted deferred action would have been removed had the Executive not implemented DACA. Most recently, in December 2014, over 25 states or state officials filed suit challenging the Administration's expansion of DACA and the creation of a DACA-like program for aliens who are parents of U.S. citizens or lawful permanent residents (known as DAPA). The states allege that these programs run afoul of the Take Care Clause and separation of powers principles of the Constitution, the INA, and substantive and procedural requirements of the APA. After finding that the states have standing, and that DAPA and the DACA expansion are judicially reviewable, a federal district court imposed a preliminary nationwide ban on the implementation of these programs in February 2015, on the grounds that the states are likely to prevail in their argument that the programs run afoul of the APA's procedural requirements. Subsequently, in November 2015, the U.S. Court of Appeals for the Fifth Circuit affirmed the lower court's finding as to the procedural violation of the APA, and also found for the states on their claim that DAPA and the DACA expansion substantively violate the APA because these programs are "not in accordance with law" and "in excess of statutory ... authority." The Supreme Court granted review, but the Justices ultimately split evenly, four votes to four votes. Consistent with recent practice in cases with such splits, the Court affirmed the Fifth Circuit's decision without issuing an opinion.

After the attacks of September 11, 2001, the 9/11 Commission Report asserted: Americans should not be exempt from carrying biometric passports or otherwise enabling their identities to be securely verified when they enter the United States; nor should Canadians or Mexicans. Currently U.S. persons are exempt from carrying passports when returning from Canada, Mexico, and the Caribbean. The current system enables non-U.S. citizens to gain entry by showing minimal identification. The 9/11 experience shows that terrorists study and exploit America's vulnerabilities. Following the Commission's advice, Congress initiated the Western Hemisphere Travel Initiative (WHTI) to fulfill a mandate by Congress in the 9/11 Commission Implementation Act of 2004 (Division B of the Intelligence Reform and Terrorism Prevention Act of 2004, P.L. 108-458 , Section 7209, signed December 17, 2004). The measure requires the Secretary of Homeland Security, in consultation with the Secretary of State, to develop and implement a plan as expeditiously as possible to require a passport or other document, or combination of documents, "deemed by the Secretary of Homeland Security to be sufficient to denote identity and citizenship," for all travelers entering the United States. On January 31, 2008, the Department of Homeland Security again tightened travel regulations with border states by requiring that all U.S. and Canadian citizens, 19 or older, present both a government-issued proof of identity (such as a driver's license) and proof of citizenship (such as a birth certificate) to cross a border by land or sea into the United States. For Americans and Canadians under the age of 18, only proof of citizenship (such as a birth certificate) is necessary. For U.S. citizens, U.S. government-issued passports and passport cards also are acceptable. Canadians can also use a government-issued passport. Both Americans and Canadians can present a valid NEXUS, SENTRI, or FAST card. Non-citizens can present a permanent residency card. Travelers from Bermuda can enter the United States by presenting a passport issued by the government of Bermuda or the United Kingdom. For Mexican citizens, including Mexican children, a passport and visa or border crossing card are required to enter the United States by land, sea, or air. As of February 1, 2008, the State Department increased passport fees by $3.00. The total cost of applying for a U.S. passport for those over 16 is $100--a $75 application fee and $25 execution fee. The total cost for children under 16 is $85--a $60 application fee and $25 execution fee. An additional $60 per application is required if expedited service is requested. Fees for a passport card are $20 for adults and $10 for children under 16, with an additional $25 execution fee for each when applying in person. Execution fees are not charged for passport or card applications submitted by mail. Since January 23, 2007, all people, including children, traveling by air between the United States and Canada, Mexico, Bermuda, and the Caribbean have been required to present a passport or other valid travel document to enter the United States. A passport is not required for U.S. citizens traveling to or from a U.S. territory, such as the U.S. Virgin Islands or Puerto Rico. The 2007 change was poorly communicated to the American public, causing much confusion. Many Americans did not differentiate air from land and sea travel in the Western Hemisphere, resulting in many applying for passports who did not need them immediately. Furthermore, the change in passport requirements coincided with passport demands for spring break and families' summer travel plans. Based on work done for the Department of State by Bearingpoint, a private contractor that greatly underestimated passport demand, the Department was caught off guard in meeting the unprecedented numbers of passport applications throughout 2007, causing months of delays in many cases. Because of the backlog of passports, the Department of State hired large numbers of contractors. According to State Department officials, 60% of the 4,400 passport employees were from private contractor firms. Passport issuance in 2008 and 2009, reportedly, has been back to the usual four-to-six-week time frame for receiving passports. The Department of State fully implemented the final phase of passport requirements for travelers entering the United States by land and sea on June 1, 2009. Land crossing requirements were originally to take effect by December 31, 2007, but were delayed by Congress, especially because of concerns of some who represent states bordering with Canada and Mexico, as well as some with concerns about the effects on the tourism/cruise industry. Legislation changed the date for WHTI implementation at all ports of entry to either June 1, 2009, or when the Secretary of Homeland Security and Secretary of State have certified compliance with specified requirements (Section B of that Act), whichever is later. As of June 1, 2009, travelers must have passports for all air, land, and sea crossings. U.S. or Canadian children under the age of 16, however, are allowed to present an original or copy of their birth certificate or other proof of citizenship. Groups of U.S. or Canadian children under the age of 19, when traveling in church, school, or social groups, or sports teams, and when entering under adult supervision, also can present birth certificates or other proof of citizenship, rather than a passport. The passport confusion that arose in 2007 resulted in straining the Department of State's ability to issue passports in a timely manner. Prior to 2007, standard passport wait times had been four to six weeks, but this lengthened to three or four months that year from the time of application to receipt of the passport. Following are tips to assist Americans with getting passports: For general information on how to apply or renew a passport and to download a passport application form, go to the State Department's website: http://travel.state.gov/passport/passport_1738.html . For checking the status of a passport application, go to http://travel.state.gov/passport/get/status/status_2567.html . For information on passport post office locations, call 1-800-275-8777 or go to the U.S. Postal Service website, http://www.usps.com/passport , to download a passport application form and to obtain passport costs. The National Passport Information Center's phone number is 1-877-487-2778. It is open from 6:00 a.m. to midnight (EST) Monday through Friday, and from 9:00 a.m. to 5:00 p.m. Saturday and Sunday. For information on WHTI passport policy from the Department of Homeland Security, go to http://www.dhs.gov/xtrvlsec/crossingborders/ . For information on implementation of passport policy at the border, see the U.S. Customs and Border Protection, Department of Homeland Security, website at http://www.cbp.gov . Both the Department of Homeland Security (DHS) and the Department of State (DOS) have distinct roles in passport policy. DHS is responsible for determining passport policies and regulations, whereas the State Department is responsible for implementing them. Some observers question whether having two departments involved is the most effective way to handle passport policy. Furthermore, some wonder if this dual-department approach to passport regulations and issuance may have contributed to the past-year's confusion and may create new confusion on passport changes in the future. Others believe that border security is of utmost importance to national security, and that having two agencies with passport responsibilities provides a dual layer of protection. Now that most Americans will need passports if they have any possibility of crossing any U.S. border, the cost of passports has become a concern to some. With the $3 increase in fees, bringing the total passport application cost for an adult to $100 and for children $85, a typical family of four would have to pay $370 to simply cross the United States border after June 1, 2009. Some who follow passport issues are concerned that this expense would be burdensome for many American families. The Department of State says that the current costs reflect the cost of doing background checks and expensive technology involved in securing identities. Accessibility to passport offices is a concern of many Americans in trying to get a passport. While there are many passport offices on the East and West coasts, they are much fewer in number with more distance between in the middle of the country. According to the Department of State, Passport Services opened a Tucson Passport Center in Arizona in 2008 and a Detroit Passport Agency in March 2009. Businesses that are involved with cross-border trade or travel (such as cruise lines) involving the United States, Canada, Mexico, the Caribbean, and Bermuda are concerned that recent passport requirements will hinder their profits. Some Members of Congress sought to postpone passport requirements in order to delay businesses from being hurt and give them time to prepare. Senator Leahy stated, "With concerns about a recession on the way, the timing for clamping down on billions of dollars in trade and travel could not be worse." On the other hand, the Secretary of Homeland Security, Michael Chertoff, asserted, "It's time to grow up and recognize that if we're serious about this [terrorist] threat, we've got to take reasonable, measured, but nevertheless determined steps to getting better security."

Prior to 2007, little or no documentation was required to enter the United States from Canada, Mexico, Bermuda, or the Caribbean. In December 2004, with the 9/11 Commission recommending tighter borders to help prevent another terrorist attack, Congress passed the Western Hemisphere Travel Initiative (WHTI), which now requires passports for anyone entering the United States. As of mid-2009, approximately 30% of American citizens hold a passport. After the January 2007 implementation of phase I of the new passport regulations (requiring passports when entering by air ), the Department of State was deluged with passport applications. The time necessary to get a passport expanded from the typical four to six weeks to several months, ruining many Americans' travel plans. On January 31, 2008, another change occurred. Government-issued proof of identity and citizenship documents are required to enter the United States from Canada, Mexico, Bermuda, and the Caribbean, according to the Department of Homeland Security. People under the age of 18, however, are allowed to present only proof of citizenship, such as a birth certificate. Phase II, implemented on June 1, 2009, adds to the existing requirements that travelers have passports for all land and sea crossings. U.S. or Canadian children under the age of 16, however, are allowed to present an original or copy of their birth certificate or other proof of citizenship. Groups of U.S. or Canadian children under the age of 19, when traveling in church or school groups, social groups, or sports teams, and when entering under adult supervision, also can present birth certificates or other proof of citizenship, rather than a passport. This report will be updated as events warrant.

Avian influenza, or "bird flu," is a contagious virus that normally infects only birds but occasionally crosses the species barrier to infect humans. In 1997, a particular strain of avian influenza, the H5N1 virus, infected 18 people in Hong Kong, killing 6 of them. Since mid-2003, more than 258 human H5N1 cases have been diagnosed worldwide, causing more than 154 deaths. According to the World Health Organization, of the few avian influenza viruses that have crossed the species barrier to infect humans, the H5N1 virus has caused the largest number of cases of severe disease and death in humans. The H5N1 virus is alarming because, if it mutates into a form that easily infects many humans, it has the potential to cause a deadly "pandemic," or a global disease outbreak in humans. In the 20 th century, there were three pandemics, in 1918, 1957 and 1968, that killed millions of people worldwide. On November 1, 2005, the Bush Administration issued a report entitled the "National Strategy for Pandemic Influenza," which described the federal government's plan to address the potential outbreak of avian influenza. The report explained: It is impossible to know whether the currently circulating H5N1 virus will cause a human pandemic. The widespread nature of H5N1 in birds and the likelihood of mutations over time raise our concerns that the virus will become transmissible between humans, with potentially catastrophic consequences. If this does not happen with the current H5N1 strain, history suggests that a different influenza virus will emerge and result in the next pandemic. This fear of a global flu pandemic has compelled many countries to prepare for the threat by stockpiling antiviral drugs and attempting to develop vaccines against the disease. According to the Bush Administration, these countermeasures are "the foundation of our [influenza virus] infection control strategy." The President's plan proposes to spend $1 billion to build a national reserve of antiviral medications such as Tamiflu and Relenza to help contain or suppress a pandemic outbreak. As of June 2007, the nation's "Strategic National Stockpile" (SNS) contained 36 million courses of antiviral medications, with a goal of having 50 million courses anticipated to be warehoused in the federal stockpile by the end of 2008. The U.S. Department of Health and Human Services (HHS) has worked with state governments to facilitate the purchase of more than 12 million treatment courses by the states as of June 2007, with a goal of obtaining 31 million courses for their respective stockpiles by December 2008. HHS Secretary Michael Leavitt has explained that the "ultimate goal is to stockpile sufficient quantities of antiviral drugs to treat 25% of the U.S. population." In addition to stockpiling existing antiviral drugs, the U.S. government is promoting the development of new antiviral drugs to combat influenza. For example, the federal government in January 2007 awarded a four-year contract of over $100 million for the development of a new influenza antiviral drug that may be quickly administered to treat persons with severe influenza. Oseltamivir phosphate, marketed under the brand name Tamiflu, is a prescription drug manufactured by the Swiss pharmaceutical company Roche, Inc. Tamiflu is not a vaccine, but is perhaps the most efficient antiviral treatment for influenza. The drug eases flu symptoms by preventing the influenza virus from spreading inside the human body. Some research studies have shown that Tamiflu is effective against the H5N1 avian and human virus strains. However, it is unknown how well Tamiflu would work to control a pandemic. Also, the drug must be ingested within 48 hours of the onset of flu symptoms for maximum efficacy. This requirement raises concerns about the utility of Tamiflu, because it is often difficult for patients to realize within such a short amount of time whether their symptoms are caused by the flu or the common cold. In addition, because Tamiflu has a shelf life of five years, a pandemic may not strike during that time period, raising the possibility that stockpiles of the medicine may go unused and become useless. Prior to 2006, Roche was the exclusive manufacturer of Tamiflu and significantly struggled to meet the strong demand for the patented drug. According to the company, manufacturing the drug is complicated, involving ten main steps, and takes a long time, from six to eight months to produce a capsule of Tamiflu once all the raw materials have been sourced. In November 2005, the World Health Organization estimated that, at Roche's then-present manufacturing capacity, "it will take a decade to produce enough oseltamivir [Tamiflu] to treat 20% of the world's population." The Tamiflu production shortage in 2005 prompted both international and domestic pressures on Roche to ease its patent monopoly and permit other companies to manufacture generic versions of the drug. It was believed that such action would help to increase supplies of the flu treatment to meet the backlog of orders, as well as make the drug more affordable. However, one of the challenges of producing large quantities of Tamiflu is obtaining enough supplies of its key active ingredient, shikimic acid. This acid may be extracted from the pods of a Chinese cooking spice called star anise. Yet there may not be enough star anise in China or elsewhere to produce Tamiflu on a massive scale. To address this shortage, Roche began experimenting with a fermentation process using genetically altered E. coli bacteria to make the shikimic acid. Roche has since declared that the fermentation process is more effective in producing the acid than processing star anise, and that the majority of shikimic acid is now derived from this process. Counterfeit drugs pose public health and safety concerns because they "may closely resemble legitimate drugs yet may contain only inactive ingredients, incorrect ingredients, improper dosages, sub-potent or super-potent ingredients, or be contaminated." The U.S. Federal Food and Drug Administration's Counterfeit Drug Task Force has stated: [W]e believe that counterfeiting is quite rare within the U.S. drug distribution system because of the extensive scheme of federal and state regulatory oversight and the steps taken by drug manufacturers, distributors, and pharmacies, to prevent counterfeit drugs from entering the system. However, we are concerned that the U.S. drug supply is increasingly vulnerable to a variety of increasingly sophisticated threats. We have witnessed an increase in counterfeiting activities and a more sophisticated ability to introduce finished dosage form counterfeits into legitimate drug distribution channels over the years. The rise in global demand for Tamiflu has contributed to the production and sale of illegal, fake Tamiflu. Pills purporting to be Tamiflu, which contain only trace elements of Tamiflu's active ingredient shikimic acid, have been shipped from parts of Asia to the United States after unsuspecting customers had ordered the counterfeit pills via the Internet; however, the U.S. Customs and Border Protection (CBP) agency has been successful in intercepting and seizing counterfeit Tamiflu shipments. Trafficking in counterfeit drugs is potentially punishable under a variety of federal laws, including the mail fraud statute, the Trademark Counterfeiting Act, and the Federal Food, Drug, and Cosmetic Act. However, prosecuting the manufacturers of counterfeit Tamiflu may prove to be challenging if they reside overseas. The cooperation of foreign governments in bringing legal action against these manufacturers may be necessary to prevent the spread of fake versions of Tamiflu within the global medicines market, as well as to impede their entrance into the United States. Roche has issued guidelines to help consumers avoid purchasing counterfeit Tamiflu over the Internet. Among these are the following recommendations: Buying Tamiflu from a website exhibiting the Verified Internet Pharmacy Practice Sites (VIPPS) seal, issued by the National Association of Boards of Pharmacy after a sites's legitimacy has been confirmed. Avoiding Internet pharmacies that do not provide a means of contacting them by telephone Being wary of very low or very high prices for the drug; the average cost for authentic Tamiflu is $80 to $90 for a 10-pill treatment. Avoiding websites selling what they claim is "generic Tamiflu"; there is currently no authorized generic version of Tamiflu. Inspecting the Tamiflu package carefully for any suspicious alterations in the seal, packaging, or label. Genuine Tamiflu is packaged in a white cardboard box with the wording "TAMIFLU Capsules 75 mg" written clearly on the front. The box contains a single blister package containing 10 capsules, which are a yellow and light grey color. Each blister contains one capsule, which can be seen through the transparent outer layer. Each blister is printed on the aluminum foil of the reverse side with the words "TAMIFLU Capsules 75 mg." One of the primary purposes for United States patent law is to provide individuals and institutions with economic incentives to engage in research and development that lead to new products or processes. By granting inventors with a limited monopoly over the use of their discoveries, patent holders will be able to receive a return on investment from their creations. Without patent protection, competitors could "free ride" on the inventor's research and development efforts and easily duplicate or otherwise practice the new inventions without having incurred the costs to develop them. A patent holder has the right to exclude others from making, using, selling, offering to sell, and importing the protected invention. Whoever performs any one of these five acts during the term of the invention's patent, without authorization of the patent holder, is liable for infringement. Note that while the patent holder has the right to exclude others from performing these acts, the conferring of a patent does not automatically allow the invention to be used or marketed in the United States--compliance with other federal laws or regulations may be required in order to do so. If a defendant is found guilty of patent infringement in a civil lawsuit brought by the patent holder, the remedies available to the plaintiff include an injunction to cease and prohibit the offending activity by the defendant, damages to compensate for the infringement, and even attorney fees. Because the Patent Act expressly states that "patents shall have the attributes of personal property," owners may sell their patent rights in a legal transfer called an "assignment." Alternatively, owners may grant others a "license" to exercise one of the five statutory patent rights A license is not a transfer of ownership of the patent, but rather is the patent owner's permission to another entity to use the invention in a limited way, typically in exchange for periodic royalty payments during the term of the patent. In a licensing arrangement, legal title to the patent remains with the patent holder. If, however, the patent holder licenses to only one party the right to practice the invention within a specific territory, and the patent holder also offers that party an express or implied promise not to license the invention to any other party, then that licensee is known as an "exclusive licensee." A patent holder may grant or convey to a licensee the right to practice the invention through a contract (typically known as a patent licensing agreement). The terms of the licensing agreement, however, may include limitations and conditions upon the grant of rights--for example, restricting the licensee from making the invention but allowing that party to sell it. A patent holder may also limit the licensee to practicing the invention for a particular purpose (for example, selling a drug only to treat a particular disease) or geographic territory (for example, selling a drug only within a particular state). Generally, such restrictions are permissible, legally enforceable, and commonly found in patent licensing agreements used in many industries including the pharmaceutical industry. As the U.S. Court of Appeals for the Federal Circuit has previously stated: [P]rivate parties may contract as they choose, provided that no law is violated thereby: The rule is, with few exceptions, that any conditions which are not in their very nature illegal with regard to this kind of property, imposed by the patentee and agreed to by the licensee for the right to manufacture or use or sell the [patented] article, will be upheld by the courts. A licensee that performs an act that exceeds the scope of the license (through a violation of the limitations and conditions of the grant of rights) is potentially liable to the patent holder for breach of contract as well as for patent infringement. Scientists working for a California biotech company, Gilead Sciences, Inc., invented Tamiflu in 1996. To help develop the drug for U.S. Food and Drug Administration approval and its subsequent marketing and production, Gilead licensed all its commercial and manufacturing rights to Roche in exchange for a $50 million license fee and royalty payments during the life of the drug's patent. Tamiflu is patent-protected until 2016. In June 2005, Gilead notified Roche that it was terminating the 1996 license agreement pursuant to a clause that provides for contract cancellation due to a "material breach" of its terms. This termination would result in a reversion of Tamiflu's manufacturing and commercial rights back to Gilead. Gilead claimed that Roche for many years has failed to use "best efforts" to manufacture and promote the drug, and is $18 million behind in royalty payments. The agreement mandates an arbitration process to resolve the dispute. On November 16, 2005, the companies announced that they had reached an amicable settlement, which amends the earlier agreement. Under the terms of the settlement, Roche will reimburse Gilead $62.5 million in retroactive cost of goods adjustments, and Gilead will retain the $18.2 million that Roche had paid under protest concerning royalties owed from 2001 to 2003. However, Gilead's share of the royalties on net sales of Tamiflu will remain unchanged, ranging from 14 to 22 percent depending on the volume of sales per year. Roche and Gilead will also establish joint committees to oversee the coordination of global manufacturing and commercialization, issuing third-party licenses to generic drug makers, and pandemic planning. Prior to the influenza pandemic threat, two other public health crises raised patent law issues: concerns over the supply of Cipro, a drug patented by the German firm Bayer, during the anthrax bioterrorism scare in late 2001; and access to affordable medication for developing countries in the 1990s to fight the HIV/AIDS epidemic in their populations. Some commentators had argued for "overriding" the patent rights of the drug manufacturers in those cases, in order to allow for generic suppliers to enter the market. Those same arguments were made in the case of Tamiflu. In early October 2005, Roche repeatedly refused to license a generic version of Tamiflu. The company cited the complex, time-consuming, and potentially explosive drug manufacturing process, as the reason for retaining its exclusive rights to produce Tamiflu: "No one can do it faster. Our assumption is that it would take a generic company about three years to gear up. Therefore, it does not make sense to out-license manufacturing." This corporate position prompted criticism from domestic and international government leaders. Then-United Nations Secretary-General Kofi Annan argued that intellectual property laws should not prevent developing countries from obtaining supplies of Tamiflu and similar antiviral influenza medication in emergency health situations. Senator Charles Schumer also had suggested that Congress might consider a "temporary suspension" of the Tamiflu patent if Roche did not agree to license the drug's production to other companies. Other Members of the 109 th Congress had expressed similar desire to abrogate Roche's patent rights in the interest of public health. Under such pressure from world leaders and politicians, Roche softened its stance and agreed to discuss sublicensing arrangements with countries and companies interested in producing generic versions of Tamiflu. However, Roche has cautioned that sublicenses will only be issued to third parties that "can realistically produce substantial amounts of the medicine for emergency pandemic use, in accordance with appropriate quality specifications, safety and regulatory guidelines." In 2006 and 2007, Roche expanded its capacity to manufacture Tamiflu by contracting with 19 external production partners. Due to its efforts to sublicense its patent rights to manufacture Tamiflu to these other drug companies, Roche has increased production of the drug to over 400 million treatments annually (as of April 2007)--an amount that exceeds the existing orders for Tamiflu from governments and corporations. The threat of compulsory licensing (or imposing other legal limitations on Roche's patent rights) may have played a role in persuading Roche to enter into the sublicensing agreements with third parties to produce Tamiflu in greater quantities. While the concern over the then-limited supply of Tamiflu has largely been addressed by Roche's substantial manufacturing expansion, the issue of intellectual property rights potentially conflicting with public health needs may again arise in the future. Therefore, this report will now examine the ways in which a patented drug's production may be increased, either without a patent holder's consent or with the patent holder's cooperation. The primary legal mechanisms to accomplish permissible encroachment upon a patent right include (1) compulsory licenses under a government's statutory authority to issue them; (2) compulsory licenses pursuant to an international treaty that grants this right; and (3) voluntary licensing agreements negotiated between the patent owner (or patent licensee) and third parties. This report addresses each of these options in turn. In the United States, the Takings Clause of the Fifth Amendment to the U.S. Constitution authorizes the federal government to take private property for public use. Such eminent domain power over intellectual property is explicitly provided by statute, codified at 28 U.S.C. SS 1498(a). This law empowers the federal government to take the intellectual property of a private entity, subject to reasonable compensation being paid to the patent holder. Section 1498(a) provides in part: Whenever an invention described in and covered by a patent of the United States is used or manufactured by or for the United States without license of the owner thereof or lawful right to use or manufacture the same, the owner's remedy shall be by action against the United States in the United States Court of Federal Claims for the recovery of his reasonable and entire compensation for such use and manufacture. By exercising this statutory authority, the federal government declares a "compulsory license" that allows third-party use of a patented invention without the authorization of the patent holder. For example, if a compulsory license was issued in the case of Tamiflu, the patent holder may not enjoin generic manufacturers from producing the drug and selling it to the government for its stockpiles. The only legal remedy available to Roche would be the right to bring suit in the U.S. Court of Federal Claims to recover "reasonable and entire compensation" from the federal government. Such compensation in a patent takings case has been limited by the courts to a "reasonable royalty," which has been defined as "the amount that a person desiring to manufacture, use, or sell a patented article, as a business proposition, would be willing to pay as royalty and yet be able to make, use, or sell the patented article, in the market, at a reasonable profit." The pharmaceutical industry warns that imposing compulsory licenses on avian flu drugs pursuant to SS 1498(a) would "take away incentives for other companies to undertake the difficult and costly work of searching for new antivirals and vaccines for this possible health crisis." Because drug products are time-consuming and expensive to develop but relatively easy to copy, the pharmaceutical industry is particularly dependent upon the patent system. Opponents of compulsory licensing argue that patent protection permits drug companies to benefit from their investment in research and development, and encourages them to continue to engage in such efforts. Some observers assert that "[b]reaking the patent through a compulsory license would actively discourage Roche from either producing the drug or lending its expertise, which would be directly counterproductive." At a congressional hearing on November 4, 2005, U.S. Department of Health and Human Services Secretary Michael Leavitt stated that he did not intend to issue a compulsory license for Tamiflu, because he was concerned that "violating" the patent would remove incentives for future drug research and development. In another congressional hearing several days later, Secretary Leavitt stated that a compulsory license would probably not be needed in light of Roche's clear intent "not to let intellectual property issues to become a barrier" to generic manufacturing of Tamiflu, and Roche's demonstrated willingness to work with other companies to produce the drug. The Agreement on Trade-Related Aspects of Intellectual Property Rights ("TRIPS Agreement") is an international agreement on intellectual property that is one component of the treaties that created the World Trade Organization (WTO) in 1995. The TRIPS Agreement establishes minimum standards of protection for patents, copyrights, trademarks, and trade secrets that each WTO signatory state must give to the intellectual property of fellow WTO members. Compliance with TRIPS is a prerequisite for WTO membership. Article 31 of the TRIPS Agreement addresses the right of WTO member states to award compulsory licenses. This article specifies a number of procedural and substantive conditions for issuing compulsory licenses, including the following: Domestic law must permit compulsory licenses to be granted. Manufacturing of a patented invention under a compulsory license shall be predominantly for the supply of the domestic market of the WTO member state authorizing such use. Authorization for such use must be terminated if and when the compulsory license's motivating circumstances cease to exist and are unlikely to recur. The patent owner must be paid adequate remuneration in the circumstances of each case, taking into account the economic value of the authorization. Under normal circumstances, the proposed user must have tried to obtain permission from the patent holder on reasonable commercial terms and conditions. If these efforts fail to obtain a voluntary license, the government may issue a compulsory license. Notably, Article 31 does not discuss the circumstances under which compulsory licenses would be justified. However, for "national emergencies" and "other circumstances of extreme urgency," Article 31 provides that a compulsory license may issue without the proposed user having to first make an effort to obtain a voluntary license from the patent holder. This time-saving, "national emergency" provision in TRIPS was clarified by the WTO in November 2001 and again in August 2003. The November 14, 2001 "Declaration on the TRIPS Agreement and Public Health" (Doha Declaration) affirms that the TRIPS Agreement "can and should be interpreted and implemented in a manner supportive of WTO Members' right to protect public health and, in particular, to promote access to medicines for all." In addition, the Doha Declaration explains that each WTO member state "has the right to determine what constitutes a national emergency or other circumstances of extreme urgency, it being understood that public health crises, including those relating to HIV/AIDS, tuberculosis, malaria and other epidemics, can represent a national emergency or other circumstances of extreme urgency." Confronted with these public health emergencies, WTO members with insufficient or no manufacturing capacities in the pharmaceutical sector may be unable to make effective use of compulsory licensing under the TRIPS Agreement. The WTO's proposed solution to this problem was announced on August 30, 2003, when the WTO General Council issued a decision that allows member states, meeting certain strict conditions, to import generic versions of drugs produced under compulsory licenses issued by other countries. Specifically, this "Paragraph 6 Agreement" permits a waiver of Article 31(f) of the TRIPS Agreement, which specifies that compulsory licenses are to be used predominantly for the supply of the domestic market. Thus, countries that produce generic drugs under a compulsory license may export them to other WTO members that are unable to manufacture the medicine to meet their urgent needs. As many nations attempt to stockpile antiviral drugs to prepare for the possible bird flu pandemic, the TRIPS "national emergency" provision for compulsory licenses has garnered public interest as a possible way to increase the production and supply of Tamiflu. However, at the time of the Paragraph 6 Agreement, the United States and 22 other developed countries decided to "opt-out" of using the compulsory license system as importers, under any and all circumstances. Some observers have speculated that the reason for this decision is to discourage compulsory licensing and put pressure on developing countries not to use it. An official in the Office of the U.S. Trade Representative has explained, however: In the negotiations leading up to this solution, developed nations as a whole recognized that it was not appropriate for us to import pharmaceuticals under this system devised to assist poor countries and agreed not to divert attention and resources away from countries the system was intended to benefit. It was also apparent that the United States was not a country that lacked manufacturing capacity, given our robust pharmaceutical manufacturing base and the prevalence of thriving U.S. innovative and generic pharmaceutical industries. Yet this opt-out may effectively prevent developed countries from importing generic versions of Tamiflu made by companies in countries that exercise Article 31 compulsory license authority or in which Tamiflu is not patent-protected. In late 2005, with Roche's production capacity limitations affecting the ability of countries to procure enough Tamiflu to treat their populations, the United States' decision to opt-out had become the focus of criticism and appeal for change. A bill was introduced in the 109 th Congress that would have directed the U.S. Trade Representative to notify the WTO General Council that the U.S. declares itself an "eligible importing member" for Paragraph 6 purposes, and that it withdraws its name from the opt-out list of countries. However, in a congressional hearing on November 8, 2005, U.S. Department of Health and Human Services Secretary Michael Leavitt downplayed the consequences of the opt-out decision, arguing that in a global pandemic situation, each country will likely only have access to what it produces domestically, as countries will want to keep domestically-produced flu drugs inside their own borders. If Tamiflu was subject to a compulsory license, Roche would still be entitled to receive three to five percent royalties. However, Roche would have no ability to control the sale price of the drug, and a cheaper generic version would mean smaller royalty payments. Roche thus would prefer an alternative to the use of compulsory licensing, which are licensing agreements voluntarily negotiated by the company with third-parties of its choosing. Licensing agreements are contracts between the patent owner (or patent licensee) and third parties that may be used to permit third parties to exercise one of the rights of the patent owner or patent licensee (in the case of a patent licensee, the contract is known as a sublicensing agreement). For example, Roche (a licensee of the patent owner Gilead) may permit other companies to manufacture and market Tamiflu in exchange for the companies paying licensing fees to Roche and agreeing to certain conditions. Such conditions in the sublicensing agreement may restrict the sale of Tamiflu to emergency government stockpiles, prevent re-exports of the drug, and time-limit the sublicense. An advantage of a sublicensing scheme is that the other pharmaceutical companies can seek and obtain Roche's manufacturing expertise to ensure quality production. In addition, sublicensing allows for coordination of obtaining the active ingredient in the antiviral drug, shikimic acid. However, some critics have asserted that these voluntary sublicensing agreements might only help rich countries to stockpile Tamiflu, and do little to improve the treatment's availability for poorer countries. They maintain that under such agreements, Roche would likely still retain the right to control pricing and could reap large profits on generic Tamiflu. As of April 2007, Roche has signed sublicensing agreements with 19 contractors to manufacture Tamiflu in nine different countries around the world. In addition, Roche has donated "rapid response" supplies of Tamiflu (more than 5 million treatment courses) to the World Health Organization for establishing regional stockpiles to help contain or slow the spread of a pandemic. Finally, Roche has agreed to arrange for special pricing for government orders and to reduce the price of Tamiflu for low income countries. Should the H5N1 virus, or some other avian influenza strain, cause a human pandemic, antiviral drugs will likely play a critical role to help prevent infection and to relieve the flu symptoms of those infected. The Tamiflu supply shortage in 2005 had sparked public debate concerning the practicality and morality of protecting intellectual property rights during a possible health crisis, which can directly affect the availability and affordability of medicine for populations in dire need of it. However, because Roche has since reached sublicensing agreements with several manufacturing partners that have significantly increased production of Tamiflu to satisfy global demand for the drug, the concern about intellectual property rights hindering preparations for pandemic influenza has largely subsided.

The potential for a worldwide influenza pandemic caused by bird flu has generated public interest in the availability and affordability of influenza antiviral medications such as the prescription drug Tamiflu. The possibility of a pandemic flu outbreak has contributed to a surge in orders for Tamiflu, as countries attempt to stockpile sufficient countermeasures. In 2005, there was considerable concern that the owner of the exclusive right to manufacture the patented drug, the Swiss pharmaceutical company Roche, Inc., lacked the production capacity to meet the needs of these governments worldwide. In response to the heightened demand for the drug, as well as faced with threatened abrogation of its patent rights by U.S. politicians and government officials in other countries, Roche significantly boosted Tamiflu production in 2006 and 2007 by voluntarily signing licensing agreements with 19 external contractors in 9 different countries to manufacture the drug. This expansion in manufacturing capacity has increased production of the drug to over 400 million treatments annually--an amount that, according to the company, is sufficient to fulfill its existing orders (as of April 2007) for Tamiflu from governments and corporations. In addition, Roche has donated "rapid response" supplies of Tamiflu (more than 5 million treatment courses) to the World Health Organization for establishing regional stockpiles to help contain or slow the spread of a pandemic. Finally, Roche has agreed to arrange for special pricing for government orders and to reduce the price of Tamiflu for low income countries. This report examines the role that intellectual property rights play in affecting the availability of a patented drug such as Tamiflu during public health crises. The report also explains one legal mechanism for increasing a patented drug's production without the patent holder's consent: governments may abrogate a pharmaceutical company's patent rights by issuing compulsory licenses to other drug companies to manufacture generic versions of the drug. Such option is available to countries under the Trade-Related Aspects of Intellectual Property (TRIPS) Agreement, a component of the treaties that created the World Trade Organization (WTO) in 1995. The U.S. government's authority to declare compulsory licenses is Section 1498(a) of Title 28 of the U.S. Code. Other legal avenues to increase the supply of, and lower the price for, a patented drug include voluntary licensing agreements between the drug's patent holder and other companies for manufacturing or distributing the drug. In the case of Tamiflu and the avian influenza antiviral drug supply, Roche's willingness to sublicense its patent rights to several manufacturing partners has helped to lessen the concern over intellectual property rights hindering efforts to prepare for and respond to an influenza pandemic.

Congress uses an annual appropriations process to fund discretionary spending, which supports the projects and activities of most federal government agencies. This process anticipates the enactment of 12 regular appropriations bills each fiscal year. If regular appropriations are not enacted prior to the start of the fiscal year (October 1), continuing appropriations may be used to provide temporary funding until the annual appropriations process can be concluded. Continuing appropriations acts are often referred to as "continuing resolutions," or "CRs," because they are typically enacted in the form of a joint resolution. CRs may be enacted for a period of days, weeks, or months. If any of the 12 regular appropriations bills are not enacted by the time that the first CR for a fiscal year expires, further extensions of that CR might be enacted until all regular appropriations bills have been completed or the fiscal year ends. None of the FY2018 regular appropriations bills was enacted prior to the enactment of H.R. 601 , a temporary CR. The measure provides continuing appropriations for projects and activities covered by all 12 of the regular annual appropriations bills from the beginning of the fiscal year, October 1, 2017, through December 8, 2017 (Division D). The measure also included separate divisions that establish a program to provide foreign assistance concerning basic education (Division A--Reinforcing Education Accountability in Development Act), supplemental appropriations for disaster relief requirements for FY2017 (Division B), and a temporary suspension of the public debt limit (Division C). On September 8, 2017, the President signed H.R. 601 into law ( P.L. 115-56 ). This report provides an analysis of the continuing appropriations provisions in H.R. 601 . The first two sections summarize the overall funding provided ("Coverage, Duration, and Rate") and budget enforcement issues associated with the statutory discretionary spending limits ("The CR and the Statutory Discretionary Spending Limits"). The third section of this report provides short summaries of the provisions in this CR that are agency-, account-, or program-specific. These summaries are organized by appropriations act title. In some instances, additional information about those appropriations and how they operate under a CR is provided. For general information on the content of CRs and historical data on CRs enacted between FY1977 and FY2016, see CRS Report R42647, Continuing Resolutions: Overview of Components and Recent Practices , by [author name scrubbed] and [author name scrubbed]. This section of the report discusses the three components of a CR that generally establish the purpose, duration, and amount of funds provided by the act: 1. A CR's "coverage" relates to the purposes for which funds are provided. The projects and activities funded by a CR are typically specified with reference to regular (and, occasionally, supplemental) appropriations acts from the previous fiscal year. When a CR refers to one of those appropriations acts and provides funds for the projects and activities included in such an act, the CR is often referred to as "covering" that act. 2. The "duration" of a CR refers to the period of time for which budget authority is provided for covered activities. 3. CRs usually fund projects and activities using a "rate for operations" or "funding rate" to provide budget authority at a restricted level but do not prescribe a specified dollar amount. The funding rate for a project or activity is based on the total amount of budget authority that would be available annually for that project or activity under the referenced appropriations acts and is pro-rated based on the fraction of a year for which the CR is in effect. Division D covers all 12 of the regular annual appropriations bills by providing continuing budget authority for projects and activities funded in FY2017 by that fiscal year's regular appropriations acts--as specified in Section 101 of P.L. 115-56 , this includes primarily Divisions A-K of the FY2017 Consolidated Appropriations Act ( P.L. 115-31 ) for 11 of the 12 regular bills and Division A of P.L. 114-223 for the Military Construction, Veterans Affairs, and Related Agencies Appropriations Act, as well as some additional specified measures and provisions. Statutory limits on discretionary spending are in effect for FY2018 as established by the Budget Control Act of 2011 (BCA; P.L. 112-25 ). The CR includes both budget authority that is subject to those limits and also budget authority that is effectively exempt from those limits--including that designated or otherwise provided as "Overseas Contingency Operations/Global War on Terrorism" (OCO/GWOT), "continuing disability reviews and redeterminations," "disaster relief," and "emergency requirements." Budget authority is provided by the CR under the same terms and conditions as the referenced FY2017 appropriations acts. Effectively, this requirement extends many of the provisions in the FY2017 acts that stipulated or limited agency authorities during FY2017. In addition, in general none of the funds are to be used to initiate or resume an activity for which budget authority was not available in FY2017. A goal of these and similar provisions in other CRs, as well as many of the other provisions discussed in the sections below, is to protect Congress's constitutional authority to provide annual funding in the manner it chooses in whatever final appropriations measures are enacted. Section 106 provides that funding in the CR is effective October 1, 2017, through December 8, 2017--about the first 10 weeks of the fiscal year. The CR provides that, in general, budget authority for some or all projects and activities could be superseded by the enactment of the applicable regular appropriations act or another CR prior to or on December 8. For projects and activities funded in the CR that a subsequent appropriations act does not fund, budget authority would immediately cease upon such enactment, even if prior to December 8. The CR provides budget authority for projects and activities funded in FY2017 appropriations acts at a rate based on the amount of funding provided in those acts for the duration of the CR (through December 8). The rate is based on the net of all funding provisions applicable to FY2017, including those that had the effect of reducing budget authority. For entitlement and other mandatory spending that is funded through appropriations acts, Section 111 provides funding to maintain program levels under current law. Most projects and activities funded in the CR are subject to an across-the-board decrease in Section 101(b) that would reduce the rate by 0.6791% below the level of FY2017 funding. Under Section 114, this decrease does not apply to appropriations designated or otherwise provided as OCO/GWOT, disaster relief, and emergency requirements. This decrease does apply, however, to advance appropriations enacted in previous fiscal years that first become available in FY2018. Appropriations for FY2018 are subject to statutory discretionary spending limits on categories of spending designated as "defense" and "nondefense" spending pursuant to the BCA. The defense category includes all discretionary spending under budget function 050 (defense); the nondefense category includes discretionary spending in the other budget functions. If discretionary spending is enacted in excess of a statutory limit in either category, the BCA requires the level of spending to be brought into conformance through "sequestration," which involves primarily across-the-board cuts to non-exempt spending in the category of the limit that was breached (i.e., defense or nondefense). The Office of Management and Budget (OMB) provides a preview report at the beginning of the calendar year calculating any adjustments to the existing statutory spending limits. For FY2018 the adjusted discretionary spending caps are $549.057 billion for defense and $515.749 billion for nondefense. Once discretionary spending is enacted, OMB evaluates that spending relative to the spending limits and determines whether sequestration is necessary. For FY2018 discretionary spending, the first such evaluation (and any necessary enforcement) is to occur within 15 calendar days after the 2017 congressional session adjourns sine die . For any FY2018 discretionary spending that becomes law after the session ends, the OMB evaluation and any enforcement of the limits would occur 15 days after enactment. The Congressional Budget Office (CBO) estimates the budgetary effects of interim CRs on an "annualized" basis, meaning that those effects are measured as if the CR were providing budget authority for an entire fiscal year. According to CBO, the annualized amount for discretionary budget authority for regular appropriations subject to the BCA limits (including projects and activities funded at the rate for operations and anomalies) is $551.489 billion for defense and $518.109 for nondefense. Although the estimate of the annualized amount for each category exceeds the statutory spending limit, a sequester order would not yet be required. As noted by CBO, the authority to determine whether a sequestration is required--and, if so, how to make the necessary cuts in budget authority--rests with OMB. In addition, because the earliest that the statutory discretionary spending limits could be enforced by a sequester is 15 days after the end of the congressional session, and the CR expires on December 8, 2017, these amounts can be adjusted prior to that time by further appropriations legislation for FY2018. When spending effectively not subject to those limits--because it was designated or otherwise provided as OCO/GWOT, disaster relief, emergency requirement, or a program integrity adjustment--is included, CBO estimates total annualized budget authority in the CR of $1,183.058 billion. In addition to the general provisions that establish the coverage, duration, and rate, CRs typically include provisions that are specific to certain agencies, accounts, or programs. These provisions are generally of two types. First, certain provisions designate exceptions to the formula and purpose for which any referenced funding is extended. These are often referred to as "anomalies." The purpose of anomalies is to preserve Congress's constitutional prerogative to provide appropriations in the manner it sees fit, even in instances when only short-term funding is provided. Second, certain provisions may have the effect of creating new law or changing existing law. Most typically, these provisions are used to renew expiring provisions of law or extend the scope of certain existing statutory requirements to the funds provided in the CR. Substantive provisions that establish major new policies have also been included on occasion. Unless otherwise indicated, such provisions are temporary in nature and expire when the CR sunsets. These anomalies and provisions that change law may be included at the request of the President. Congress could accept, reject, or modify such proposals in the course of drafting and considering appropriations measures that provide continuing appropriations. In addition, Congress may identify or initiate any other anomalies and provisions changing law that they wish to be included in the CR. This section of the report summarizes provisions in this CR that are agency-, account-, or program-specific, alphabetically organized by appropriations act title for 11 of the 12 regular appropriations acts covered in Section 101. (There are no anomalies concerning items funded in the State Foreign Operations, and Related Programs Appropriations Act.) The summaries generally provide brief explanations of the provisions. In some cases they include additional information, such as whether a provision was requested by the President or included in prior year CRs. For additional information on specific provisions in the CR, contact the CRS appropriations experts listed in Table 1 at the end of the report. For the duration of the CR, Section 116 increases funding for the Commodity Supplemental Food Program, a domestic food assistance program that predominantly serves the low-income elderly. Instead of basing funding for the program on the FY2017 funding level ($236.1 million), this CR provision would use a base of approximately $238.1 million. This anomaly is typically included to maintain current caseload and participation while accounting for increased food costs. This section makes a technical correction for the computation of a rescission to Section 32 funds in light of the availability that is allowed for carryover funds, especially for disaster payments that are at the discretion of the Secretary of Agriculture. In addition to extending the funding levels provided in Division A of P.L. 115-31 , the CR explicitly extends $20 million for the FDA Innovation Account that was made available by the second CR of FY2017 ( P.L. 114-254 , Division A, Section 193), pursuant to the 21 st Century Cures Act ( P.L. 114-255 ), which established the account. The FY2018 CR continues $29 million of funding for the Emergency Conservation Program that was in Division A of P.L. 115-31 (Section 714). However, the CR does not extend the disaster funding for agricultural land rehabilitation programs that was provided in the second CR of FY2017 ( P.L. 114-254 ). This section allows the Census Bureau to draw on money from the Periodic Censuses and Programs account--which includes the decennial census and other major programs such as the economic census, the census of governments, and intercensal demographic estimates, together with geographic and data-processing support--at the rate necessary to maintain the 2020 census schedule. Section 102 is similar to provisions typically included in CRs in previous years. It prohibits the Department of Defense from funding either so-called new starts--that is, procurement or research and development of a major program for which funding was not provided in FY2017--or acceleration of rate of production for any major program for which FY2017 procurement funding was provided. This section would extend the authorization (that would otherwise have expired at the end of FY2017) for the Office of Security Cooperation with Iraq, originally established by Section 1215(f)(1) of P.L. 112-81 , the FY2012 National Defense Authorization Act. This extension would apply until the earlier of the end date for this CR or the date of enactment of a new authorization for military activities of the Department of Defense. Section 120 would authorize the Department of Energy (DOE) to apportion funding for the Uranium Enrichment Decontamination and Decommissioning Fund through December 8, 2017, up to the rate for operations that would be necessary to avoid disruption of continuing projects or activities. This account primarily funds the decommissioning and environmental remediation of three federal uranium enrichment facilities in Kentucky, Ohio, and Tennessee administered by the DOE Office of Environmental Management. DOE would be required to notify the House and Senate appropriations committees within three days after each use of this authority. This provision is similar to provisions included in CRs for previous fiscal years. Section 121 would extend the authority for the Reclamation States Emergency Drought Relief Act ( P.L. 102-250 , 43 U.S.C. 2201 et seq.) from the end of FY2017 to the date of the CR's expiration. This authority allows the Bureau of Reclamation to undertake activities that minimize or mitigate drought damages or losses within the 17 Reclamation States (including tribes within those states) and Hawaii. Authorized activities include, among other things, authority for construction to alleviate the adverse impacts of drought (typically in the form of drilling private wells), acquisition of water for specified purposes, and preparation of drought contingency plans with state and local entities. Section 122 would provide for the crediting of offsetting collections by three of DOE's Power Marketing Administrations at alternative rates than would otherwise be provided for pursuant to rates based on FY2017 enacted appropriations. This language is to account for annual variation in these collections. This section grants congressional approval of the District of Columbia general fund and capital budgets for FY2018 through December 8, 2017, consistent with the requirements of the District of Columbia home rule act ( P.L. 93-198 ), which requires congressional approval of the District's budget. Section 123 grants the District the authority to expend locally raised funds only for those programs and activities that received funding the previous year under the District of Columbia Appropriations Act, 2017 (Title IV of P.L. 115-31 , Division E). District officials may expend locally raised funds at the rate set forth under ''Part A--Summary of Expenses'' as included in the Fiscal Year 2018 Local Budget Act of 2017 (D.C. Act 22-99). These provisions change the basis for calculating the rate of operations under Section 101 for several accounts. Section 124(a) specified that the basis for the rate of operations for FY2018 for General Services Administration--Allowances and Office Staff for Former Presidents be based on $4.754 million. The rate for FY2018 for two other accounts is to be based on a reduction of the actual amount provided for FY2017 by a specified amount corresponding to the amount that was appropriated for expenses related to the presidential inauguration and transition. Section 124(c) specifies that the rate be based on $14.900 million rather than $34.895 million for District of Columbia--Federal Payment for Emergency Planning and Security Costs in the District of Columbia; and Section 124(d) specifies that the rate be based on $375,784 million rather than $380,634 million for National Archives and Records Administration--Operating Expenses. In addition, Section 124(b) specifies that no funds in the CR are provided for General Services Administration--Expenses, Presidential Transition; and Executive Office of the President and Funds Appropriated to the President--Presidential Transition Administrative Support. See also Section 124(e) of P.L. 115-56 for treatment of FY2017 National Park Service appropriations associated with the presidential inauguration. This section allows apportionment of funds for the Office of the Secretary and Executive Management, Management Directorate, and Intelligence, Analysis, and Operations Coordination to be apportioned at a higher rate. The Trump Administration's budget request for FY2018 had envisioned shifting the costs for certain shared functions from the Department of Homeland Security (DHS) Working Capital Fund to the budget of these particular components. In its request for this section, the Administration indicated that without this section, funds would be provided in the FY2017 structure at the FY2017 rate, and manual accounting adjustments would have to be made if this transfer of functions were allowed to go ahead in the FY2018 annual appropriations for DHS. This section is similar to provisions from past years' CRs for U.S. Customs and Border Protection (CBP) and allows DHS to adjust the apportionment of FY2018 funds in order to maintain the staffing levels for four operational components of DHS at the level they were at the end of FY2017. The Administration requested this flexibility for CBP and U.S. Immigration and Customs Enforcement. As in Section 163 of P.L. 114-254 , the second CR for FY2017, Congress broadened the reach of the provision to include the Transportation Security Administration and the U.S. Secret Service. Two key differences in this provision from this last appearance is that in this CR, it is solely for personnel costs to maintain staffing levels, not for other operational expenses, and it does not describe any specific purposes for which the funding is provided. This section extends special procurement authorities for research and development activities at DHS, known as "other transaction authority." Similar provisions have previously been included in CRs covering DHS, including, most recently, Section 132 of the FY2017 CR ( P.L. 114-223 ). This section extends through the term of the CR special authority for the Commandant of the Coast Guard to designate any of the Coast Guard's acquisition positions as having a critical hiring need and thus provides for the use of special expedited hiring authorities to fill those positions. This specific authority was granted in Section 404 of P.L. 111-281 , the Coast Guard Authorization Act of 2010, and extended by later legislation through FY2017. While the Administration did not specifically request this extension, it specifically indicated that it had no objection to its inclusion. This section will allow funding provided by the CR for the Federal Emergency Management Agency's Disaster Relief Fund to be used at a faster rate than would have otherwise been allowed under the CR. While this provision was not included in the Administration's list of proposed anomalies, the director of OMB expressed the Administration's support for such a provision as a part of its request for supplemental appropriations submitted in the wake of Hurricane Harvey. This section extends the authorization of two parts of the National Flood Insurance Program (NFIP), which had been set to expire at the end of FY2017, through the term of the CR: Section 1309(a), which provides a borrowing limit for the NFIP of $30.425 billion, and Section 1319, which provides the authority to execute new flood insurance contracts. This provision does not increase the borrowing limit for the NFIP: It maintains its current limit. This provision authorizes the Department of Agriculture (through the Forest Service) and the Department of the Interior (DOI) to transfer funds from their respective FLAME accounts to repay funds previously transferred from other accounts and used for wildfire suppression purposes. The Forest Service and DOI FLAME accounts were established by the Federal Land Assistance, Management, and Enhancement Act to be a source of reserve funds for emergency wildfire suppression purposes. Previously, FLAME funds were available to be transferred only to the respective Forest Service and DOI Wildland Fire Management (WFM) accounts and used for wildfire suppression operations upon a Secretarial Declaration and in specific circumstances. Section 101(a)(7) expands the authority to allow FLAME funds in the CR to be transferred to any Forest Service or DOI account if funds from that account were previously used to pay for suppression operations--called "fire borrowing." Such fire borrowing occurs when WFM and FLAME suppression funds are depleted. The appropriations to the FLAME accounts are designated as emergency spending under Section 114(b) of the CR and, thus, are not subject to the 0.6791% across-the-board reduction. This provision reduces by $4.2 million the basis for calculating the rate of operations under Section 101 for the National Park Service's (NPS) Operation of the National Park System budget account. The total FY2017 appropriation for this NPS account is treated as though it were $2.421 billion, as compared with the actual appropriation of $2.425 billion. The amount of the reduction is corresponds to the amount that was appropriated in FY2017 for expenses related to the presidential inauguration. See also Section 124(a)-(d) of P.L. 115-56 for treatment of other FY2017 appropriations associated with the presidential transition. This provision extends, through September 30, 2019, the authority in the Federal Lands Recreation Enhancement Act for five agencies to establish, collect, and retain recreation fees on federal recreational lands and waters. The five agencies are the Bureau of Land Management, Bureau of Reclamation, Fish and Wildlife Service, and National Park Service in the Department of the Interior and the Forest Service in the Department of Agriculture. In FY2016, the agencies collected approximately $377 million in recreation fees under the program. Each agency can retain and spend the collected fees without further appropriation. Most of the monies are retained at the site where collected for on-site improvements to benefit visitors. Without this extension, the authority of the agencies would expire on September 30, 2018. Section 132 relates to the Dwight D. Eisenhower Memorial Commission and the Dwight D. Eisenhower Memorial. It extends, through the end of the CR (December 8, 2017), the Eisenhower Memorial Commission's authorization to establish a "permanent" memorial to President Eisenhower in the District of Columbia. Without the extension, the commission's authority to establish the Eisenhower Memorial would have expired on September 30, 2017. Section 133 provides an additional $3.0 million to the Environmental Protection Agency (EPA) for administrative expenses of issuing direct loans and guaranteed loans for water infrastructure projects as authorized under the Water Infrastructure Finance and Innovation Act (WIFIA) of 2014. These additional funds are provided "notwithstanding section 5033" of WIFIA, which specifies a cap on administrative costs. Through the duration of the CR, Section 134 extends the authority for EPA to collect and use two categories of fees under the Federal Insecticide, Fungicide, and Rodenticide Act (FIFRA). Pursuant to the Pesticide Registration Improvement Extension Act of 2012 (PRIA 3), EPA's authority to collect pesticide maintenance fees from registrants under FIFRA expires at the end of FY2017; the authority to collect pesticide registration service fees begins to phase out at the end of FY2017. Section 134 also extends the PRIA 3 prohibition on EPA collection of fees from any person seeking that the agency establish, or grant an exemption from, a pesticide tolerance (i.e., maximum residue levels on food or feed) under the Federal Food, Drug, and Cosmetic Act. Section 135 extends the duration of the National Advisory Committee on Institutional Quality and Integrity (NACIQI) through December 8, 2017. NACIQI is a committee tasked with assessing the process of accreditation in higher education and the institutional eligibility and certification of institutions of higher education to participate in federal student aid programs authorized under Title IV of the Higher Education Act of 1965 (HEA). Section 114(f) of the HEA provides that NACIQI shall terminate on September 30, 2017. Section 422 of the General Education Provisions Act (GEPA) generally provides an automatic one-year extension of the authorization of appropriations for, or the duration of, programs administered by the Department of Education. This automatic extension would occur only if Congress and the President--in the regular session that ends prior to the beginning of the terminal fiscal year of authorization or duration of an applicable program--do not enact legislation extending the program. GEPA Section 422 also explicitly states that the automatic one-year extension does not apply to the authorization of appropriations for, or the duration of, committees that are required by statute to terminate on a specific date. Thus, the automatic one-year extension does not apply to NACIQI, and NACIQI would have terminated on September 30, 2017, had it not been extended. Section 136 ensures that the $80 million in cost-of-living adjustments provided to Head Start and Early Head Start grantees in FY2017 is included in the formula for each grantee's "base grant" for FY2018. This allows grantees to maintain program enhancements (e.g., salary increases) that had been supported by these funds in the previous year, consistent with common practice. The Head Start Act defines a base grant as the "amount of permanent ongoing funding" provided to Head Start agencies for a given fiscal year. Section 137 extends the period during which certain funds, obligated in FY2011 through FY2014 to consortia of state workforce agencies that administer Unemployment Insurance (UI), may be expended. These funds support information technology upgrades to improve state administration of UI benefits. Previously, authority was provided to expend these UI state consortia funds for six fiscal years after the fiscal year of obligation. This section extends that period one additional year (for a total of seven fiscal years after the fiscal year of obligation). Section 138 directs the National Institutes of Health (NIH) to continue reimbursing research universities and institutions for indirect costs (facilities and administrative, or F&A, costs) according to the rules and procedures in place during the third quarter of FY2017. It also prohibits funds appropriated in the CR from being used to develop or implement any further limitations of F&A cost reimbursements. Over the last 10 years, NIH data indicates that direct costs (project-specific expenses) have averaged about 72% of the total grant award, while indirect costs have averaged about 28%. The FY2018 Trump Administration budget request proposed capping the indirect cost rate for NIH grants at 10%. Section 139(a) would make the funding deposited in the State Children's Health Insurance Program's (CHIP) Child Enrollment Contingency Fund prior to the beginning of FY2018--and income derived from investment of those funds--unavailable for obligation. Section 139(b) would rescind $2.7 billion of mandatory spending from amounts previously appropriated for FY2017 CHIP allotments to states. Funds for FY2017 had previously been appropriated by Sections 301(a) and 301(b)(3) of the Medicare Access and CHIP Reauthorization Act of 2015 (MACRA). First, Section 301(a) of MACRA provided two semi-annual appropriations of $2.85 billion for the first and second halves of FY2017, respectively. Second, Section 301(b)(3) of MACRA appropriated an additional $14.7 billion for the first half of FY2017, and this funding remains available until expended. Section 139(b) rescinds $2.7 billion in unobligated national allotments from the additional appropriation in Section 301(b)(3) of MACRA. Previously, multiple appropriations laws rescinded a total of $42.8 billion from FY2011 through FY2017 from the CHIP Program, including CHIP performance bonus payments fund, the Child Enrollment Contingency Fund, and unobligated national allotments. While Section 101(a)(8) generally continues funding for programs funded in the Departments of Labor, Health and Human Services, and Education appropriations act through a formula based on the FY2017 omnibus ( P.L. 115-31 ), there are three exceptions to that formula that effectively continue certain funding instructions or additional appropriations that were enacted in the second FY2017 CR ( P.L. 114-254 ). In the cases of the NIH Innovation Account and the Account for the State Response to the Opioid Abuse Crisis, the rate for operations for these additional appropriations is subject to the across-the-board reduction of 0.6791%. In addition, the amounts appropriated to these accounts are to be subtracted from any cost estimates provided for purposes of budget controls. Section 101(a)(8) applies FY2016 requirements to the transfer of funds previously appropriated to the Prevention and Public Health Fund (PPHF) (see Section 171, P.L. 114-254 ). Specifically, the Secretary of the Department of Health and Human Services (HHS) is required, within 10 days of enactment, to transfer PPHF funds for FY2018 to HHS agencies in the same amounts as per the comparable transfer of FY2016 appropriations, except that the amount transferred to the Centers for Disease Control and Prevention shall be $1 million less than the amount transferred for FY2016. Section 101(a)(8) appropriates FY2018 funds in the NIH Innovation Account. Under the terms of Section 1001 of the 21 st Century Cures Act ( P.L. 114-255 ), the funds in this account must be appropriated in order to be available for expenditure. However, instead of specifying a rate for operations based on the amount in the account for FY2018 ($496 million), the FY2018 CR specifies a rate for operations based on the FY2017 appropriation ($352 million) provided in the second FY2017 CR (Section 194). The purpose of the NIH Innovation Account is to create a funding mechanism for four NIH Innovation Projects authorized by the Cures Act: 1. The Precision Medicine Initiative ($40 million for FY2017); 2. The Brain Research through Advancing Innovative Neurotechnologies Initiative ($10 million for FY2017); 3. Cancer research ($300 million for FY2017); and 4. Regenerative medicine using adult stem cells ($2 million for FY2017). The NIH director may transfer these amounts from the NIH Innovation account to other NIH accounts but only for the purposes specified in the Cures Act. If the NIH director determines that the funds for any of the four Innovation Projects are not necessary, the amounts may be transferred back to the NIH Innovation account. This transfer authority is in addition to other transfer authorities provided by law. Section 101(a)(8) appropriates FY2018 funds in an account created by the 21 st Century Cures Act to support grants to states "for the purpose of addressing the opioid abuse crisis." Under the terms of Section 1003 of the 21 st Century Cures Act, the funds in this account must be appropriated in order to be available for expenditure. The rate for operations for the account in the FY2018 CR is based on the FY2017 appropriation ($500 million) provided in the second FY2017 CR (Section 195). This section allows for amounts made available for salaries for employees in the Office of the Senate Sergeant at Arms and Doorkeeper to be apportioned at rates necessary to maintain current Senate cybersecurity capabilities. In general, 2 U.S.C. SS4577 prohibits spending more than one-quarter of the total amount available for employees covered by this line-item in the first quarter of a fiscal year. This section would rescind unobligated funds that were provided for the Department of Veterans Affairs (VA) Major Construction account in the Disaster Relief Appropriations Act, 2013 ( P.L. 113-2 ), for costs associated with Hurricane Sandy. These rescinded funds would be reappropriated to the VA Major Construction account and would be available until September 30, 2022. These funds would be in addition to the FY2017 level of funding for the VA Major Construction account and the funding provided in the CR for FY2018 for the same account. Section 101(a)(10) of the CR would fund some accounts of the VA for FY2018 though a formula using the FY2017 level of appropriations provided in the Military Construction, Veterans Affairs, and Related Agencies Appropriations Act, 2017 (Division A of the Continuing Appropriations and Military Construction, Veterans Affairs, and Related Agencies Appropriations Act, 2017, and Zika Response and Preparedness Act; P.L. 114-223 ), minus an across-the-board rescission of 0.6791%. The Medical Community Care account, and the Medical Services account's additional $50 million that was provided in the Military Construction and Veterans Affairs--Additional Appropriations Act, 2017 (Division L of P.L. 115-3 ), available until September 30, 2018, would not be included in the funding rate of operations under the CR for FY2018. The VA is funded through a combination of budget year and advance appropriations. Currently seven accounts are funded as advance appropriations: (1) compensation and pensions, (2) readjustment benefits, (3) insurance and indemnities, (4) medical services, (5) medical community care, (6) medical support and compliance, and (7) medical facilities. P.L. 114-223 provided $170.32 billion in advance appropriations for these seven accounts for FY2018, which would be available on October 1, 2017. Section 142 extends authorization for the Department of Housing and Urban Development's (HUD) Mark-to-Market program for the duration of the CR. Through the program, which was created in 1997, HUD may renew expiring project-based Section 8 rental assistance contracts and take other steps to preserve the long-term affordability of properties receiving HUD rental assistance. The original statutory authorization for the program had a repeal date of October 1, 2001, but that date has been extended by Congress several times. Most recently, the FY2015 Consolidated and Further Continuing Appropriations Act ( P.L. 113-235 ) extended it through October 1, 2017. The President's FY2018 budget request and both the House and Senate committee-passed FY2018 HUD appropriations bills all included an extension of the program. Table 1. Selected CRS Appropriations Experts

This report provides an analysis of the continuing appropriations provisions for FY2018 in Division D of H.R. 601. The measure also included separate divisions that establish a program to provide foreign assistance concerning basic education (Division A--Reinforcing Education Accountability in Development Act), supplemental appropriations for disaster relief requirements for FY2017 (Division B), and a temporary suspension of the public debt limit (Division C). On September 8, 2017, the President signed H.R. 601 into law (P.L. 115-56). Division D of H.R. 601 was termed a "continuing resolution" (CR) because it provided temporary authority for federal agencies and programs to continue spending in FY2018 in the same manner as a separately enacted CR. It provides temporary funding for the programs and activities covered by all 12 of the regular appropriations bills, since none of them had been enacted previously. These provisions provide continuing budget authority for projects and activities funded in FY2017 by that fiscal year's regular appropriations acts, with some exceptions. It includes both budget authority that is subject to the statutory discretionary spending limits on defense and nondefense spending and also budget authority that is effectively exempt from those limits, such as that designated as for "Overseas Contingency Operations/Global War on Terrorism." Funding under the terms of the CR is effective October 1, 2017, through December 8, 2017--roughly the first 10 weeks of the fiscal year. The CR generally provides budget authority for FY2018 for projects and activities at the rate at which they were funded during FY2017. Most projects and activities funded in the CR, however, are also subject to an across-the-board decrease of 0.6791% (pursuant to Section 101(b) of Division D). According to the cost estimate prepared by the Congressional Budget Office (CBO), the annualized discretionary budget authority provided in the FY2018 CR, as enacted, and subject to the statutory discretionary spending limits is approximately $1,070 billion. When spending that is effectively not subject to those limits (Overseas Contingency Operations, disaster relief, emergency requirements, and program integrity adjustments) is also included, the CBO estimate is $1,183 billion. CRs usually include provisions that are specific to certain agencies, accounts, or programs. These include provisions that designate exceptions to the formula and purpose for which any referenced funding is extended (referred to as "anomalies") as well as provisions that have the effect of creating new law or changing existing law (often used to renew expiring provisions of law). The CR includes a number of such provisions, each of which is briefly summarized in this report. CRS appropriations process experts for each of these provisions are listed in Table 1. For general information on the content of CRs and historical data on CRs enacted between FY1977 and FY2016, see CRS Report R42647, Continuing Resolutions: Overview of Components and Recent Practices, by [author name scrubbed] and [author name scrubbed].

The U.S. sugar program provides a price guarantee to producers of sugar beets and sugarcane and to the processors of both crops. The U.S. Department of Agriculture (USDA) further is directed to administer the program at no budgetary cost to the federal government by limiting the amount of sugar supplied for food use in the U.S. market. To achieve both objectives, USDA has four available tools--as reauthorized by the 2014 farm bill (Agricultural Act of 2014, P.L. 113-79 , Section 1301 of Title I and Section 9009 of Title IX), and by Chapter 17 of the Harmonized Tariff Schedules of the United States--to keep domestic market prices above guaranteed levels. These are: extending price support loans to processors at specified levels (the basis for the price guarantee); setting marketing allotments to limit the amount of sugar each processor can sell; establishing import quotas to restrict the amount of sugar allowed to enter the U.S. market; and making a sugar-to-ethanol backstop available if marketing allotments and import quotas are insufficient to keep market prices above guaranteed levels. For an explanation of how these tools operate together, see CRS Report R42535, Sugar Program: The Basics . During farm bill debate, producers of sugar beets and sugarcane, and the beet refiners and raw sugar mills that process these crops into refined sugar and raw cane sugar, respectively, supported extending the U.S. sugar policy as contained in the enacted 2008 farm bill. They argued that the program had succeeded in ensuring "reliable supplies of high-quality, safe, responsibly-produced sugar at reasonable prices" for consumers, and that it provided producers with "an economic safety net." They emphasized that these objectives had been achieved at "zero cost to American taxpayers." Sugar crop producers and processors are represented by the American Sugar Alliance (ASA). Two large general farm organizations supported continuing the current sugar program without any change. The American Farm Bureau Federation stated that while other commodities will be faced with reduced government support in the next farm bill, "the sugar program should be left intact as efforts to generate savings would require convoluted policy structures." The National Farmers Union supported continuing the sugar program and encouraged "Congress to work with ... sugar producers to adopt a strong sugar program in future farm bills." Also, a coalition of 17 developing countries that benefit from preferential quota access to the U.S. sugar market favored continuing current U.S. sugar policy, arguing that it "provides a guaranteed level of access ... at fair, predictable prices." Sugar users (i.e., manufacturers of sugar-containing food products and beverages) supported making changes to the U.S. sugar program. In their view, the sugar program "was made worse by the 2008 farm bill" and had operated as "a textbook example of the consequences of excessive government intrusion in the marketplace." They argued that the program, "by overly restricting the supply of sugar in the U.S. market," had kept U.S. market sugar prices "far above" world sugar prices. This development, they contended, resulted in U.S. consumers and food manufacturers paying more for sugar than foreign users pay, and encouraged the relocation of food processing jobs offshore, led to the elimination of thousands of U.S. jobs, and created a "dramatic inequity of the benefits provided to sugar growers over other agricultural producers" supported by other commodity programs. Sugar users are primarily represented by the Coalition for Sugar Reform (CSR). CSR includes the food and beverage companies that use sugar (e.g., confectionery firms, bakeries, cereal manufacturers, beverage makers and dairy companies, and the trade associations for these industries), consumer and trade advocacy groups, and business organizations. Three trade associations representing food manufacturing firms where sugar is a principal input also placed U.S. sugar policy at the top of their legislative agenda. They are the American Bakers Association, the National Confectioners Association, and the Sweetener Users Association. In 2013, congressional opponents of current U.S. sugar policy introduced identical bills to revise U.S. sugar policy ( H.R. 693 and S. 345 , Sugar Reform Act of 2013). These were intended to be used as amendments to be offered on the floor when each chamber debated the farm bill. These measures proposed to retain the current structure of the sugar program but modify various price support, marketing allotment, and import quota provisions. They were crafted to authorize flexibility in how USDA uses the two program tools that limit sugar supplies but still meet the statutory directive that the program operate at no cost (i.e., maintain market prices above support levels so that processors have no incentive to forfeit price support loans, and if attained, not record any budget outlays). Both bills also would have repealed the sugar-for-ethanol program. Efforts within Congress to complete action on an omnibus farm bill after the November 2012 elections did not succeed. In late December, attention shifted to finding a legislative vehicle to extend existing authorities for agricultural commodity programs, including sugar. In the final days of the 112 th Congress, congressional leadership decided to use the "fiscal cliff" bill to simply extend many 2008 farm bill provisions through September 30, 2013. Among its provisions, Section 701(a) and (b) of P.L. 112-240 extended the 2008 farm bill's commodity program authorities for one year. This meant that 2008-enacted sugar program authority applied to the 2013 sugar crops (i.e., most of FY2014, as beets and cane are harvested and processed and sugar is subsequently marketed). Separately, Section 701(f)(9) provided authority, if triggered, for USDA to implement the sugar-to-ethanol program for the 2013 sugar crops. Earlier in 2012, the Senate approved a farm bill ( S. 3240 ) that would have continued existing sugar program authorities. Two floor amendments offered to change the Senate Agriculture Committee-reported measure were defeated. S.Amdt. 2393 (tabled, or rejected, on a 50-46 vote) would have phased out the program within three years. S.Amdt. 2433 (defeated on a 46-53 vote) would have reverted most program authorities to those in effect prior to the 2008 farm bill changes and would have repealed the sugar-to-ethanol program. This amendment served as the basis for the Sugar Reform Act bills introduced early in 2013. The House Agriculture Committee-approved farm bill ( H.R. 6083 ) also would have reauthorized the sugar program without change. The House, though, never considered this measure. The Senate-passed farm bill ( S. 954 ) and the House-passed farm bill ( H.R. 1947 ) proposed to continue 2008-enacted U.S. sugar policy without change. An amendment (identical to S. 345 , Sugar Reform Act) to reflect the interests of sugar users and consumers was offered by program opponents during Senate floor debate on May 22, 2013, but was defeated. On June 20, 2013, the House debated future sugar policy when it considered an amendment to H.R. 1947 , the first farm bill. This proposal, similar to H.R. 693 (Sugar Reform Act), was defeated. Table 1 provides a side-by-side comparison of the enacted 2008 farm bill sugar program provisions with those enacted in the 2014 farm bill. For comparison, the table also lays out the provisions of the defeated Sugar Reform Act offered as floor amendments during the debate on the 2014 farm bill. The Senate Agriculture Committee, when reporting out its farm bill ( S. 954 ) on May 14, 2013, proposed to reauthorize the 2008 farm bill sugar program without any change through crop year 2018 (SS1301 of the Agriculture Reform, Food, and Jobs Act of 2013). The committee's measure also called for reauthorizing the sugar-for-ethanol program in the bill's Energy title (SS9008). During floor debate on S. 954 , the Senate considered one amendment to revise the committee-approved sugar program provisions. This amendment was defeated on a 45-54 vote. Offered by Senator Shaheen on May 22, 2013, S.Amdt. 925 proposed to reduce price support levels (from 18.75C//lb. for raw cane sugar, and 24.09C//lb. for refined beet sugar) to those in effect just prior to enactment of the 2008 farm bill (FY2008, i.e., 18.0C//lb. for raw cane sugar; 22.9C//lb. for refined beet sugar), and to make a number of changes to require USDA to administer sugar marketing allotments and sugar import quotas in ways that would result in sugar being available "at reasonable prices." The amendment would have granted USDA discretionary authority to suspend or modify any marketing allotment provision, taking into account the interests of consumers, those employed in the food production sector, businesses, and agricultural producers. It also would have required USDA to exercise discretion in administering the sugar import quota--for example, by allowing for adjustments in quota levels to provide for adequate sugar supplies at reasonable prices. Another provision would have required USDA to set the ending sugar stocks-to-use ratio at about 15.5%, but with authority to adjust this target to prevent "unreasonably" high prices or loan forfeitures. Sugar users argued that having USDA use this stocks-to-use level in implementing the sugar program would result in much lower prices than in the 2009-2011 period. This amendment also would have repealed the sugar-to-ethanol program. The House Agriculture Committee, in reporting its farm bill ( H.R. 1947 ) on May 14, 2013, similarly proposed to reauthorize the enacted 2008 farm bill sugar program without any change through crop year 2018 (SS1301 of the Federal Agriculture Reform and Risk Management Act of 2013). The House-reported bill also called for reauthorizing the sugar-for-ethanol program in the Energy title (SS9009). Representative Goodlatte filed an amendment to revise the sugar program with an eye to offering it during committee markup, but withdrew it from consideration. On June 20, 2013, the House considered one amendment to revise the committee-approved sugar program provisions. This amendment was defeated on a 206-221 vote. Offered by Representative Pitts, its text was identical to H.R. 693 (Sugar Reform Act) introduced earlier in 2013, and to the amendment offered during Senate floor debate. With the defeat of this farm bill ( H.R. 1947 ), the House subsequently considered a scaled-back farm bill without a nutrition title ( H.R. 2642 ) that would have reauthorized current sugar program authorities on an indefinite basis (i.e., no expiration date). The sugar-for-ethanol program, however, would have only been authorized through the 2018 crop. This measure passed the House on July 11 by a 216-208 vote. On October 11, 2013, the House debated H.Res. 378 to instruct House farm bill conferees to "advance provisions to repeal" one sugar program requirement added by the 2008 farm bill and proposed to be continued by both the House and Senate farm bills. This requirement stipulates that USDA can increase imports of sugar under a sizeable import quota only after the midpoint of the marketing year (i.e., April 1), unless an emergency sugar shortage surfaces earlier. Prior to 2008, USDA had discretion to increase this quota at any time of the year if it determined market circumstances warranted such action. H.Res. 378 was introduced by Members who supported the position of food manufacturers that use sugar. Their intent was to have House conferees advocate for a return to the discretionary authority that the Secretary of Agriculture previously exercised "to manage supplies of sugar throughout the marketing year to meet domestic demand at reasonable prices." The resolution would have been non-binding if passed. The House defeated this measure by a 192-212 vote. With the sugar and sugar-to-ethanol program provisions identical in both the House- and Senate- passed measures, farm bill conferees concurred and focused instead on resolving differences elsewhere in the commodity and nutrition titles. Sugar producers and processors applauded continuation of current policy that they said will enable the sector to deal "with the dual threat of increasing foreign subsidies and falling sugar prices." Food manufacturers expressed disappointment that conferees failed to reform the sugar program that they maintain costs taxpayers "nearly $300 million last year," puts "bakers, consumers, and other food manufacturers at a disadvantage," and sends "thousands of jobs overseas." During the 113 th Congress, supporters of maintaining current sugar policy introduced a measure that urges the President to seek the elimination of other countries' subsidies that support the production or export of sugar ( H.Con.Res. 39 ). If the President determines that all covered countries have eliminated these subsidies, the resolution calls for the President to propose legislation to Congress to implement a "zero for zero" sugar subsidy policy. In other words, once other countries eliminate their market-distorting sugar programs, the U.S. sugar production sector also would advocate for an end to U.S. sugar policy. Opponents introduced other measures to eliminate current sugar policy. Sections 101 and 102 of H.R. 1567 would eliminate the sugar price support, marketing allotment, and import quota provisions. S. 956 would permanently suspend price support and related authorities for specified agricultural commodities, including those that provide price support and marketing allotments for sugar. The Congressional Budget Office (CBO) projected in its May 2013 baseline that the continuation of current sugar policy as approved by the Senate, and reported by the House Agriculture Committee, would result in budget outlays of $39 million over 5 years (FY2014-FY2018) and $188 million over 10 years (FY2014-FY2023). While CBO scored the operation of the sugar price support program at zero in each of these time periods, its projection assumed that USDA will in some years need to activate the sugar-to-ethanol program. In scoring the 2014 farm bill conference agreement, CBO did not change this budget projection. In a more recent projection, the Food and Agricultural Policy Research Institute (FAPRI) estimates that sugar policy as enacted by the 2014 farm bill and accounting for expected market conditions would result in outlays of $133 million over 5 years (FY2014-FY2018) and $446 million over 10 years (FY2014-FY2023). CBO also projected that the Sugar Reform Act amendment would have achieved total 5-year savings of $27 million (FY2014-FY2018) and 10-year savings of $82 million (FY2014-FY2023) from the above baseline that assumed the continuation of current sugar policy. Since the amendment would have repealed the sugar-to-ethanol program, this score implied that USDA in some years would record outlays in administering the sugar program's price support operations. Opponents pointed to the federal outlays incurred to support sugar prices in the last quarter of FY2013 and the first quarter of FY2014 to defend their view that the sugar program does not operate at "no cost" and needs to be reformed. Countering, program supporters pointed out that the enacted 2008 farm bill directs USDA to administer the program at no cost to taxpayers, and if that cannot be achieved, to take steps to minimize costs. Further, they noted that the non-recourse price support loans available to sugar processors are designed to guarantee them minimum prices for their sugar when market prices fall below these minimums. Accordingly, forfeiting on loans is an option that the authorized program allows them to exercise when this occurs. With the actions that USDA took to head off loan forfeitures of 2012-crop processed sugar, and its subsequent decisions to implement the sugar-to-ethanol program using sugar that processors forfeited, the sugar program recorded $259 million in budget outlays (i.e., $141 million in FY2013, $118 million in FY2014). Of this total, 67% ($174 million) represents the cost of the sugar-to-ethanol program (i.e., purchases of sugar by USDA from processors, and offering forfeited sugar, for sale to ethanol producers at a substantial discount). The remaining 33% ($85 million) is attributable to sugar purchased by USDA and then exchanged for import rights that cane refiners and brokers surrendered to USDA. The main issue in sugar policy debate over the last few years revolved around the price level for domestic sugar . Sugar growers and processors sought the highest level possible, so long as the program's minimum price guarantee was met. Users of sugar in manufactured food products sought as low a price as possible within the basic structure of the 2008-enacted program. Processors sought to retain the program's minimum price guarantees. Users sought to reduce them by 4% to 5%. Processors sought to retain all other details of the current program, designed in large part to accommodate the uncertainties surrounding how much sugar Mexico ships north in any year. Users sought to grant USDA more flexibility in how program tools are administered, by repealing certain prescriptions added in 2008 designed to reduce its discretionary authorities to manage the program. Their objective was to have USDA manage the program in ways that could result in U.S. market prices for raw cane and refined sugar being lower and closer to what they were in the years leading up to the 2008 farm bill period (see Figure 1 and Figure 2 ). Domestic sugar prices are expected to remain close to current levels ( Figure 2 ) for the remainder of FY2014 as the 2013 sugar crops continue to be processed and marketed. USDA expects that over the next several months, U.S. prices will stay above loan forfeiture levels due to lower U.S. sugar production, reduced imports of sugar from Mexico, and an increase in demand from food manufacturers. A top USDA official confirmed this outlook in an interview, stating "he believes the department will be able to comply with Congress' mandate to run the program without taxpayer expense if possible." In reacting to final farm bill action, food manufacturers that use sugar signaled their intent to continue to fight for reform by working with House and Senate leaders to make sure the sugar program "is on the table, even if those legislative efforts must take place outside of the Farm Bill process." These opponents note that congressional supporters "gained substantial momentum during the past year with the close votes that occurred on their floor amendments, and that efforts will continue for program modifications." Program supporters also expect the "battle" over the sugar program's future to continue. Sugar farmers and processors continue to emphasize that foreign sugar subsidies make U.S. sugar policy necessary, and that trade-distorting policies used by Brazil, India, Mexico, and Thailand, among others, need to be eliminated. Once these policies are disciplined through multilateral trade negotiations under the auspices of the World Trade Organization (WTO), the U.S. sugar production sector would advocate for an end to current U.S. sugar policy. Sugar industry spokesmen point to H.Con.Res. 39 as a roadmap to accomplish this (see " Other Bills " for details). Observers of the longstanding WTO Doha Round negotiations note that trade negotiators have tried since 2001 to discipline trade-distorting agricultural policies but have not yet succeeded. Further, WTO member countries have not yet agreed upon any timetable to go beyond the limited deals covering agriculture agreed to at the December 2013 Bali Ministerial. This outlook suggests that the U.S. sugar production sector's roadmap would not yield any results for quite some time, and likely not in the time period covered by the newly reauthorized sugar program (i.e., through FY2019). Looking at the near term, sugar industry spokesmen note that any efforts to change the program require addressing the impact of large unrestricted sugar imports from Mexico. Specifically, the industry seeks joint management of sugar by both the United States and Mexican governments to balance supply and demand. To address the criticism made that the sugar program no longer operates on a no-cost basis (as seen in FY2013), the industry notes that the $258 million spent was less than 3% of commodity program spending and the first time in a decade that the program had not operated at no net cost to the taxpayer. Retired CRS Specialist [author name scrubbed] was the original author of this report.

The 2014 farm bill (Agricultural Act of 2014, P.L. 113-79) continues the sugar and the sugar-to-ethanol programs without change for another five years (i.e., through FY2019). The sugar program provides a minimum price guarantee to sugar crop processors and is structured to operate at no cost to the federal government using two tools: marketing allotments that limit the amount that sugar processors can sell, and import quotas that restrict the quantity of foreign sugar allowed to enter the U.S. market. The sugar-to-ethanol program is intended to be used if marketing allotments and the administration of import quotas do not succeed in keeping market prices for sugar above minimum guaranteed levels. If activated, it ensures that stocks of sugar are not carried over to the following marketing year so as to continue to depress prices. During farm bill debate, Members of Congress engaged in vigorous debate on future sugar policy on behalf of both sides. Sugar producers/processors and food manufacturers also waged aggressive media campaigns to influence the outcome of amendments offered during floor debate. Producers of sugar beets and sugarcane, and the processors of these crops into sugar, favored retaining the current program without change. They highlighted the jobs and economic activity created by the domestic sugar sector. Food manufacturers that use sugar in their products sought flexibilities in how the U.S. Department of Agriculture (USDA) administers the program, with an eye toward paying lower prices as a result. In advocating changes, they pointed to the higher wholesale refined sugar prices paid since the 2008 farm bill provisions took effect (twice the level compared to the previous 2002 farm bill period), and to the jobs that their firms create. The enacted provisions reflect those agreed to by the House and Senate Agriculture Committees in reporting out their respective farm bills. During the period that Congress considered this latest farm bill (2012-2014), opponents of the sugar program offered five floor amendments to change both committees' reported provisions and to instruct House conferees. All were defeated. In the 112th Congress, S.Amdt. 2393 to S. 3240 would have phased out the program within three years. S.Amdt. 2433 to S. 3240 would have reverted most program authorities to those in effect prior to the 2008 farm bill changes and repealed the sugar-to-ethanol program. In the 113th Congress, S.Amdt. 925 to S. 954 and H.Amdt. 227 to H.R. 1947 would have lowered price support levels to those in effect in FY2008, and made a number of changes to require USDA to administer sugar marketing allotments and sugar import quotas so that sugar would be available "at reasonable prices." It also would have repealed the sugar-for-ethanol program. These amendments were nearly identical to the freestanding Sugar Reform Act (S. 345 and H.R. 693). In scoring the farm bill, the Congressional Budget Office (CBO) estimated that if current sugar policy continued, a 10-year total of $188 million in outlays would occur for FY2014-FY2023, all of it associated with the sugar-to-ethanol program. CBO scored the Sugar Reform Act as reducing these outlays by $82 million over this period. Separately, USDA actions taken in late FY2013 to reduce sugar supplies and activate the sugar-to-ethanol program to prop up market prices did not boost prices sufficiently above program-guaranteed levels. Consequently, these, together with subsequent USDA actions to dispose of sugar pledged as collateral for loans by processors and then forfeited, resulted in $259 million in federal outlays associated with the 2012 sugar crops. Although existing sugar policy remains intact in the 2014 farm bill, the debate between sugar program supporters and opponents, which largely revolves around the level of domestic sugar prices, is expected to continue. Sugar growers and processors seek the highest price possible, with backstops in place to ensure they receive the benefits of the current price guarantee. Users of sugar in manufactured food products want as low a price as possible within the basic structure of the current program.

In the context of the controversy surrounding the renewal of China's most-favored-nation (MFN) status (1) or its permanent grant, it should be pointed out thathistorically the specific MFN issue involved is that of tariffs rather than of the general MFN treatment as envisagedby the General Agreement on Tariffs andTrade or the bilateral commercial compacts to which the United States is a party. Thus, the MFN status incontroversy and, consequently, discussed in this reportis limited to nondiscriminatory tariff treatment of China; that is, the application to imports from China of the sameconcessional customs duty rates agreed to bythe United States in reciprocal negotiations with other trading partners. The United States has applied such MFN tariff treatment as a matter of statutory policy, enacted in 1934, generally to all of its trading partners. This policy wasmodified with the enactment of Section 5 of the Trade Agreements Extension Act of 1951 (P.L. 82-50), whichrequired the President to suspend MFN tarifftreatment of the Soviet Union and all countries of the then Sino-Soviet bloc. Under this statutory mandate, PresidentTruman suspended China'smost-favored-nation tariff status as of September 1, 1951. After China's occupation of Tibet, that country's MFNstatus also was suspended as of July 14, 1952. Whereas earlier the MFN status could, under certain conditions, be restored to a suspended country by presidentialaction, such restoration could take place, sinceOctober 1962, only by specific law, until the Trade Act of 1974, in Title IV, provided specific authority and set outthe conditions and the procedure for itstemporary restoration to "nonmarket economy" (NME) countries and its subsequent continuation in effect. Under Title IV, the key elements of the procedure for temporary restoration of the MFN status to an NME country (2) are (1) conclusion of a bilateraltradeagreement containing a reciprocal grant of the MFN status and additional provisions required by law, and approvedby the enactment of a joint resolution; and (2)compliance with the freedom-of-emigration requirements ("Jackson-Vanik amendment;" Section 402; 19 U.S.C.2432). These requirements can be fulfilled eitherby a presidential determination that the country in question places no obstacles to free emigration of its citizens, or,under specified conditions, by a presidentialwaiver of such full compliance. In accordance with this procedure, the President, on October 23, 1979, transmitted to Congress the trade agreement with China, signed on July 7, 1979, itsproclamation (Pres. Proc. 4697; 44 F.R. 61161), and the executive order (E.O. 12167; 44 F.R. 61167) granting toChina the Jackson-Vanik waiver (H.Doc.96-209). The agreement was approved by Congress on January 24, 1980 (H.Con.Res. 204, 96th Congress) andentered into force on February 1, 1980(together with the reciprocal grant of the MFN status, which it contains in addition to all other provisions requiredby Section 405(b) of the Trade Act of 1974; 19U.S.C. 2435(b)). The continuation in force of China's (or any other NME country's) MFN status is contingent on (1) triennial extensions of the underlying trade agreement and(2) continued compliance with the Jackson-Vanik amendment, the latter in the case of two NME countries,including China, by means of annual renewals of thewaiver authority and existing waivers. The agreement, concluded for a 3-year initial term, itself provides for automatic 3-year extensions, but is subject to termination by either party upon notice at least30 days before the expiration of any 3-year term. The continuation in force of the agreement is also subject to therequirement in Section 405(b)(1)(B) of the TradeAct of 1974 (19 U.S.C. 2435(b)(1)(B)), which applies to any trade agreement concluded under Title IV with anNME. Under that provision, the agreement isrenewed triennially if a satisfactory balance of concessions has been maintained during the life of the agreement andthe President determines "that actual andforeseeable reductions in United States tariff and nontariff barriers ... resulting from multilateral negotiations [whichbenefit China unilaterally because of its MFNstatus] are satisfactorily reciprocated by [China]." Such determination has thus far been published six times, mostrecently as Presidential Determination No.98-14 of January 30, 1998 (63 F.R. 5857), extending the agreement through January 31, 2001. (3) To remain in force, the Jackson-Vanik overall waiver authority as well as the specific China waiver (and China's most-favored-nation tariff status, which iscontingent on it) at present must be renewed annually. The renewal procedure entails (1) a President'srecommendation, which must be made by June 3 of everyyear, that the existing waiver authority and individual waivers be extended for another 12-month period (throughJuly 2 of the following year). Such extension is(2) automatic upon the President's recommendation unless it is disapproved by the enactment of a joint resolution(before 1990, adoption of a one-houseresolution). The language of the disapproval resolution is prescribed by law, and a specific fast-track procedure is provided for its consideration. In its basic legislative steps,the resolution must be reported within 30 calendar days (or else the committee considering it may be discharged),may be amended only with respect to thecountry (or countries) to which it applies, and the debate on it is limited in either chamber to 20 hours, dividedequally between those favoring it and thoseopposing it. The resolution must be approved by August 31. A presidential veto of the resolution must beoverridden by the August 31 deadline or within 15 daysof session after Congress has received the veto message, whichever is later. (4) If the resolution is enacted, the waiver and the MFN status cease to beeffective onthe 61st day after its enactment. Particularly in recent years, congressional opposition to the continuation in force of China's MFN status has increased on various grounds, mostly unrelated to thefreedom-of-emigration considerations. Despite this opposition, legislative action to disapprove its annual extensionshas, thus far, been consistently unsuccessfuland China's waiver and MFN status have remained in force. Moreover, the controversy in Congress has recentlyundergone a decided shift of its focus from theissue of whether to continue in force China's MFN status under the provisions of Title IV to the opposite one ofgranting such status to China unconditionally andpermanently. In a related side issue, the opposition to the application of MFN treatment to imports from China among the public at large has been in some part caused by anobvious misunderstanding of the term "most-favored-nation treatment" itself, taking it in its literal meaning.Congress, primarily prompted by thismisunderstanding with respect to China, consequently, enacted legislation (Section 5003 of the Internal RevenueRestructuring and Reform Act of 1998 ( P.L.105-206 )) replacing the misleading term in all seven instances of the then existing and in any future statutes withthe term "normal trade relations" (NTR) oranother appropriate term. (5) As long as China remains subject to the Title IV regime (see footnote 2), MFN status could be withdrawn fromChina, either permanently or temporarily, in one ofseveral ways: (1) by direct legislation enacted through regular legislative process (6) ; (2) by using the specific means provided in the Trade Act of 1974 for denyingMFN tariff status to a NME country that had it restored under that law, i.e., by the specific fast-track enactment ofa joint resolution disapproving the mid-yearannual renewal of the Jackson-Vanik waiver authority with respect to China, if such renewal is recommended bythe President; (3) by the President's failure torecommend such renewal with respect to China in the first place, for noncompliance with the Jackson-Vanikrequirements; or (4) by direct action by the Presidentsuspending or withdrawing China's MFN status. China also could lose its MFN status if the agreement is terminated,upon notice, at the end of a term, or,presumably, if the 3-year extension of the U.S.-China trade agreement in force does not take place because thePresident declines or omits to make the requireddetermination. (7) In past years, Congress has repeatedly and consistently attempted to terminate or restrict China's MFN status by means of resolutions disapproving the annualextension of China's waiver or by specific legislation, or subject its continuation in force to additional statutoryconditions, primarily in the area of human rights. None of these measures has become law, although two of them (one in either session of the 102nd Congress), settingadditional conditions for the annualextensions of MFN status, came close to being enacted: passed by both houses, they were vetoed by the Presidentand the veto was upheld by the Senate. A special situation arose in mid-1993, when the President extended China's waiver for another year, but at the same time in Executive Order 12850 also setspecific additional conditions for the mid-1994 extension of China's waiver and MFN tariff status. These conditionsclosely reflected those set in the severalversions of the United States-China Act of 1993 (103rd Congress) and, in addition to compliance withthe Jackson-Vanik amendment, mandated compliance withthe 1992 U.S.-China prison labor agreement and significant progress with respect to China's adherence to theUniversal Declaration of Human Rights, release ofand accounting for Chinese citizens imprisoned or detained for the nonviolent expression of political and religiousbeliefs, ensuring humane treatment of prisonersby allowing access to prisons by international humanitarian and human rights organizations, protecting Tibet'sreligious and cultural heritage, and permittinginternational radio and TV broadcasts into China. The E.O. also charged U.S. officials to pursue resolutely actionsto ensure that China keeps its commitments tofollow fair, nondiscriminatory trade practices in dealing with U.S. businesses, and adheres to the NuclearNon-Proliferation Treaty, the Missile TechnologyControl Regime guidelines, and other nonproliferation commitments. Although China denounced the action taken by the President, the principal sponsors in both houses of the legislation to subject the 1994 extension of China'sMFN status to additional conditions (Representative Pelosi and Senator Mitchell) expressed their satisfaction withthe President's action as representing asufficient step and stated that further congressional action on their respective bills would be unnecessary. Thelinking of China's MFN status to overall humanrights, however, was abandoned in mid-1994 when President Clinton renewed the China waiver taking into accountonly its statutory condition, namely,compliance with the freedom-of-emigration requirement of the Jackson-Vanik amendment. Subsequent legislativemeasures to disapprove the renewal or subjectit again to broader human rights conditions failed. In both sessions of the 104th Congress, the joint resolutions disapproving the presidential extensions of China's MFN status through the renewals of theJackson-Vanik waiver failed of passage. Likewise, no action was taken on several other bills, such as one nullifyingChina's waiver and subjecting its restorationto enactment by regular procedure; or another, conditioning the continuation of China's waiver on Taiwan's speedyadmission to the World Trade Organization(WTO); or one assessing additional tariffs on imports from China until the President determines that China is fullyimplementing the agreement on the protectionof American intellectual property rights in China. In the 105th Congress, joint resolutions disapproving the mid-year renewals of the waiver authority were introduced in both sessions but failed to be enacted,allowing the extension of the waiver and China's MFN status to remain in force through July 2, 1999. No specificlegislation was introduced to withdrawaltogether China's MFN status; such action, however, was proposed with respect to goods produced or exported bythe People's Liberation Army or a Chinesemilitary company, but not further considered. China's MFN status also would have been impaired by a bill whichrequired quarterly adjustments of U.S. tariffs onimports from China based on the amount by which China's tariffs on exports from the United States exceed U.S.tariffs on imports from China. China's MFN status with the United States also could have been adversely affected by legislation, introduced but not passed, requiring prior congressionalapproval of U.S. support of China's admission to the WTO and the withdrawal of the United States from the WTOif China were to be admitted without U.S.support. In January 1998, the President also published the determination renewing the 1979 trade agreement with China for three years through January 31, 2001 (see p. 2). In the 106th Congress, congressional action regarding China's MFN status --other than two failed annual attempts to disapprove the Presidents renewal of China'sfreedom-of emigration waiver--as in the preceding Congress, reflected to some extent the current action for China'sadmission to the WTO. Fourmeasures--which would have had only indirect adverse effect on China's NTR status--were introduced (but notpassed) to prohibit U.S. support of China'sadmission unless approved by legislation. Three of the four measures also required the United States to withdrawfrom the WTO if China were to be admittedwithout the U.S. support. Lack of U.S. support, however, would have had no practical consequences, since it couldnot prevent China's admission. United States'withdrawal from the WTO, on the other hand, would have had not only serious consequences for U.S.-China traderelations but even more serious consequencesfor the United States' leading role in overall international trade relations. China's admission to the WTO would have played a more direct role the U.S. MFN policy toward China through the "snap-back" provision of the proposedChina Market Access and Export Opportunities Act of 1999. Under the provision, current U.S. duty rates on importsfrom China would be increased to thepre-Uruguay Round levels if China were not according adequate trade benefits to the United States or takingadequate steps toward becoming a WTO member.Lower duty rates would be restored if the relevant contingency were reversed. In the context of the Jackson-Vanik amendment and Title IV procedure, the sole statutory criterion forcontinuing in force or withdrawing China's MFN status atpresent is China's compliance with the freedom-of-emigration requirements--a criterion that in presentcircumstances no longer represents a practical obstacle toMFN treatment of China by the United States. The advocates of denying MFN status to China, however, have gonebeyond the narrow scope of thefreedom-of-emigration issue and have based their opposition to continued MFN status on China's violation of humanrights in general, its unfair trade practicesand obstacles to market access, lack of legal and regulatory transparency, the large and growing U.S. trade deficitwith China, China's uncooperative attitude inweapons and nuclear nonproliferation, and, more recently, the alleged illegal Chinese donations to the DemocraticNational Committee, or nuclear espionage. Supporters of MFN treatment of China, among them the Administration, have taken the position that the resolution of these issues ought to be pursued throughconsultations and negotiations in other fora, or by other appropriate means. Particularly the structural trade andeconomic issues involved, they suggest, wouldbest be resolved in the still ongoing negotiations for China's accession to the World Trade Organization. In the viewof the supporters of China's continued MFNstatus, its withdrawal would be counterproductive since it would increase friction and be less conducive to resolutionof any problems through dialogue. It would,they assert, particularly in the human rights area, possibly exacerbate the situation, in addition to the adverseeconomic consequences it would engender. Economic consequences would be considerable. Withdrawal of China's MFN status would result, in the first instance, in significant duty increases on about 95%of U.S. imports from China, totaling $99,580.5 million in 2000. The cost effect of the increases would vary amongthe various product groups, but would on thewhole be substantial. Table 1 illustrates how the withdrawal of the MFN tariff status would change the duty rates assessable in 2001 on 15 major products or product groups importedfrom China. Table 1. Illustrative MFN and Full-Duty Rates Applicable in 2001 to Major Imports from China In view of the overall substantial differences between the concessional (MFN) and full rates of duty, it is clear that the termination of China's MFN status wouldresult in substantial increases in the cost of imports from China. The average trade-weighted MFN duty rate on all2000 imports from China, dutiable as well asnondutiable, was 3.8% (on dutiable alone, 7.1%). Without MFN treatment, and assuming no change in the volumeof imports, this rate would have been at aboutthe 45% level. An even larger gap between the MFN and full-duty treatment would occur in the top categories ofU.S. imports from China, primarily because asubstantial share of them are duty free under MFN treatment but would be subject to high duty rates without it. On the basis of our recent survey of imports under the individual tariff items each of whose imports in 2000 exceeded $100 million (212 items in all) and whichtogether accounted for $66.7 billion (67.0%) of all U.S. imports from China in that year, the termination of China'sMFN status would increase the importers'overall cost of those products by over one-third, mostly in the range between 25% and 65%. Compared to similar data for earlier years, these figures indicate a larger concentration of China's exports to the United States in duty-free products or thosedutiable at low rates (up to 10% ad valorem). Imports free of duty under the NTR tariff treatment accounted for 87out of 212 included tariff items, at a total valueof $36.3 billion (36.5% of total U.S. imports from China), and imports dutied at rates of up to 10% (mostly 5%) advalorem accounted for 104 tariff items, totaling$25.9 billion (26.0% of total imports) (see Table 2 ). The data also suggest a significantlyincreasing absolute intensification of China's exports to the UnitedStates in the product lines subject to zero or low-rate duty rates. As a consequence of the changes brought about by the termination of China's NTR status, the trade pattern of articles now imported from China would be likely tochange substantially. Much of their sourcing would be likely to shift to suppliers in other countries or to domesticsuppliers. This restructuring also could andoften would result in higher costs to the importers and consumers of the articles involved. This, in part because thoselow-priced imports from China that wouldstill take place would generally be subject to higher, in many instances much higher, non-NTR duties, and in partbecause the cost of imports from alternativesources at NTR duty rates would most likely be higher than present imports of comparable goods from China dueto their higher product prices. Although some of the increases in importers' costs would likely be in part absorbed in the subsequent chain of distribution, relative cost increases at the retaillevel would still be high, particularly on low-margin, moderately priced consumer goods (certain clothing, footwear,household electrical and electronic products,toys, etc.). China is now a substantial supplier of such goods, and some of them may, at least temporarily, evenbecome priced out of the U.S. market. Because ofthe type of the articles involved, the resulting increased costs and reduced availability would affectdisproportionately lower-income U.S. consumers. On the Chinese side, such changes would obviously have an adverse effect by reducing significantly the U.S. demand for such imports from China. The size ofthis reduction and the impact of its adverse effect on China's economy would depend on a number of factors, but,in the opinion of several China trade experts,would be substantial. It would be, it is claimed, particularly damaging to the economy of China's southern provinces(Fujian and Guangdong), which are mostdependent on exports and where much of China's exports originate. Indirectly, it would also adversely affect HongKong and the economic benefits it derivesfrom being the port of transit for close to 60% of China's exports to the United States, and whose businesses alsohave substantial manufacturing interests in theneighboring southern China: hence, Hong Kong's general opposition to the withdrawal of China's MFN status. HongKong's reversion to China's sovereignty as aSpecial Administrative Region has not changed its international status as a separate trade and customs entity northe role it has played in the past in China'sforeign trade and other economic relations. A withdrawal of China's MFN status would also have adverseconsequences for other major investors in South China:Taiwan, Japan, and the United States. Table 2. Incidence of Changes in Duty Rates Due to China's MFNStatus (imports in 2000 under 212tariff items, valued each $100 million and over; Note: Due to rounding, detail may not add to total. Depending on whether and, if so, in what way and to what extent China would retaliate against imports from the United States (by increasing its tariffs tonon-MFN levels, or taking other import-restrictive measures), the annual loss of U.S. exports to China could besignificant, most likely affecting U.S. exports ofgrain, power generating machinery, aircraft, and fertilizer products. Also likely to be adversely affected would beoverall U.S. economic relations with China,particularly U.S. investment and establishment of American businesses. In addition to having serious adverse practical disapproval of the extension of temporary MFN/NTR treatment of China under the provisions of Title IV would gocounter to the obvious intent of the Congress to permanently normalize trade relations with China, expressed in thesubstantial vote in favor of P.L. 106-286 (seep. 14). Denial of China's MFN status would have to be implemented also with having regard of two relevant provisionsof the 1979 U.S.-China trade agreement, still inforce, addressing specifically the discontinuance of the agreement or of any of its provisions. In its automatic 3-yearextension provision (Article X.2), theagreement allows for its termination if either party to it "notifies the other of its intent to terminate this Agreementat least thirty (30) days before the end of aterm." The agreement also provides (in Article X.3) that "if either Contracting Party does not have domestic legalauthority to carry out its obligations under thisAgreement, either Contracting Party may suspend application of this Agreement, or, with the agreement of the otherContracting Party, any part of thisAgreement." This provision appears to be applicable with respect to MFN treatment in the event that the waiverauthority is withdrawn under the Jackson-Vanikamendment or the treatment itself is terminated by a specific newly enacted statute. A more generally applicable provision (Article IX), which asserts "the right of either Contracting Party to take any action for the protection of its securityinterests," also might conceivably, if circumstances warranted, be used to suspend the MFN treatment. An additional element to be considered in the context of U.S. MFN policy toward China is China's almost completed--if somewhat delayed--procedure formembership in the World Trade Organization (9) andthe obligation of WTO members (which include the United States) to accord to each other unconditionalMFN treatment in its all-encompassing meaning (i.e., not only with regard to tariffs). This obligation is containedin Article I of the General Agreement on Tariffsand Trade 1994 (GATT 1994), one of the many compacts resulting from the Uruguay Round of multilateral tradenegotiations that constitute the AgreementEstablishing the World Trade Organization. China's accession to the WTO, the procedure for which was initiated in 1986, is a goal that China as well as many other WTO members, including the UnitedStates, are earnestly pursuing. China's 6-year-old negotiations of a bilateral trade agreement with the United States,the provisions of which make part of China'sprotocol of accession to the WTO, intensified in the several months prior to the early April 1999 visit to the UnitedStates by China's premier, Zhu Rongji, andresulted in a partial agreement on market access for agricultural and industrial products and various services. Thenegotiations to resolve several other differencesbetween the two countries, which the United States considered of essence for China's participation in the WTO,however, were temporarily suspended by China inthe wake of the accidental bombing by NATO aircraft of China's embassy in Belgrade. The bilateral negotiationswere resumed and were successfully concludedwith the signing of a voluminous and comprehensive bilateral agreement on November 15, 1999. There are,however, still some unresolved issues of interest tothe United States being negotiated multilaterally with the WTO. China's accession has also become an issue of direct interest to Congress through the introduction in the 105th and 106th Congresses of several measures requiringstatutory approval of the U.S. support of such accession (see p. 5). When China accedes to the WTO, the continuation of the present U.S. policy (which conditions China's MFN treatment by the United States on compliance withthe requirements of Title IV) or, more drastically, an imposition of additional restrictions on, or withdrawal of, MFNstatus from China would constitute aviolation of the U.S. obligations under the GATT 1994 Article I, calling for "general most-favored-nationtreatment" of all GATT signatories/WTO members. Insuch a case, China would--after its accession--have cause to submit the issue for resolution to the WTO DisputeSettlement Body. One way for the United States to avoid such violation would be by taking recourse to WTO Article XIII. This article provides for nonapplication of all WTOmultilateral agreements between any current and a newly acceding member if, before the accession agreement ofthe new member is approved by the WTOGeneral Council, either country does not consent to such application. (10) If the United States and China then wished to apply reciprocally any otherprovisions ofthe WTO package of agreements (except permanent MFN treatment), they could technically do so by amending theexisting bilateral agreement or renegotiating itby including provisions for such application. Such course of action, however, does not appear likely in practice under present circumstances, particularly in view of the fact that a comprehensive agreement,the benefits of which weigh heavily to the benefit of the United States, has already been reached between the UnitedStates and China as part of China's accessionto the WTO. Recourse to WTO Article XIII would also put this agreement on hold until the United States were ableto apply to China the WTO agreement in itsentirety, essentially by extending to it unconditional and permanent MFN status, a quid pro quo onwhich China would undoubtedly insist. (11) Due to China's progress in its quest for accession to the WTO, the focus of congressional China MFN debatehas in recent years shifted from the issue of annualrenewals of China's status under a Jackson-Vanik waiver to one of granting China permanent unconditionalMFN/NTR status. The shift has been brought aboutby the likelihood that China will soon become a WTO member, and such membership will require both countriesto apply to each other permanentmost-favored-nation treatment. More crucially, denial of permanent NTR treatment on the part of the United Statesby continuing the practice of renewing itannually would make impossible the reciprocal application of the WTO Agreement as well as of the comprehensiveU.S.-China bilateral agreement, which wassigned on November 15, 1999, as part of the process of China's accession to the WTO (see preceding section). Although attempts to grant permanent MFN/NTR status to China--whether unconditionally or tied to China's membership in the WTO--had been made alreadyin the 105th Congress, the action came to fruition in the 106th Congress. Draft legislation authorizing the President to terminate the application of Title IV of the Trade Act of 1974 (including, principally, the Jackson-Vanik amendment)and by proclamation extend permanent nondiscriminatory treatment to China was transmitted by the White Houseto Congress in a Presidential message (13) onMarch 8, 2000. It was introduced on March 23 jointly by Senators Roth and Moynihan as S. 2277 and referredto the Committee on Finance, and onMay 15 by Representative Archer (by request; H.R. 4444 ) and referred to the Committee on Ways and Means.In addition to the language ofcomparable legislation enacted earlier to grant permanent nondiscriminatory status to several other NME countriesin similar situations, the two bills required thePresident to transmit to Congress, before making the determination terminating the application of Title IV to China,a report certifying "that the terms andconditions for China's accession to the WTO are at least equivalent to those agreed" in the U.S.-China bilateralagreement. The bills also set as the effective dateof the legislation a date "no earlier than the effective date of China's accession to the WTO," thereby equating theextension of permanent MFN status to Chinaunder domestic law with the United States' identical international obligation under the WTO. H.R. 4444 was amended and reported favorably by the House Ways and Means Committee with the addition of provisions detailing criteria andprocedures for product-specific remedial action--to remain in force for 12 years--against disruption of the U.S.market by surges in imports from China.Anti-surge provisions would apply regardless of whether such surges are autonomous or caused by diversion ofChinese exports from third countries to the UnitedStates because of import-safeguard action by those countries against disruptive surges in their imports fromChina. (14) These provisions, a bipartisan proposalbyRepresentatives Levin and Bereuter and supported by the Administration, address the concern regarding possibleinjurious consequences of China's permanentNTR status. They are the U.S. domestic enactment of the special anti-surge mechanism negotiated as part of theU.S.-China bilateral agreement, but made part ofChina's WTO accession protocol and applicable on an MFN basis to any WTO member country's imports fromChina. H.R. 4444 was further amended by the Rules Committee (15) with the addition of provisions establishing a Congressional-ExecutiveCommission tomonitor and report on China's human rights and compliance with WTO commitments, and a task force to monitorand enforce China's compliance with the U.S.anti-slave-labor statute, establishing programs to develop China's commercial and labor law, and expressing thesense of Congress that China's and Taiwan'saccession to the WTO be approved at the same time. The Rules Committee version was passed by the House onMay 24, 2000, in a roll-call vote of 237 to 197. S. 2277 was reported favorably without amendment on May 25, 2000, (16) but not further considered. Instead, the Senate, on September 7, 2000,began considering H.R. 4444 . Due to a large number of amendments--none of which was agreed to-- thedebate on the measure was protracted andthe vote on it was delayed to September 19, when it was passed by a vote of 83 to 15 and on October 10, 2000signed by the President (Title I, P.L. 106-286 ). Even though legislation approving China's permanent normal trade relations (PNTR) status has been enacted, PNTR treatment itself--in accordance with thelegislation--will not enter into force until China accedes to the WTO. The accession becomes effective 30 days afterChina ratifies the protocol ofaccession--now still being negotiated--and a decision by the WTO General Council (foreseeably in late 2001)approving China's accession. China's favorable MFN/NTR situation after the legislative approval of the U.S.-China bilateral trade agreementsuffered a setback in early April 2001 as a result of the negative reaction in Congress as well as in the general public, triggered by China's intransigence followingthe April 1 collision, over international watersoff the coast of South China, of a U.S. Navy reconnaissance plane and a Chinese fighter. Legislative reaction inCongress to China's insistence that the UnitedStates apologize for the accident was swift: on April 4, Representative Hunter and a large number of cosponsorsintroduced H.R. 1467 to repealnondiscriminatory trade treatment of China, whether temporary or permanent, and prohibit any subsequent extension of it. On the same day, a somewhat lessradical measure ( H.R. 1497 ) was introduced by Rep. Murtha and seven cosponsors, repealing the alreadyenacted permanent NTR status to China, butleaving the Title IV authority for temporary NTR status unchanged with respect to China. Both bills were referredto the Ways and Means Committee, but thus farsaw no further action. (17) Despite this opposition in Congress, the President, on June 1, 2001, renewed China's Jackson-Vanik waiver for one year (Presidential Determination 2000-16; 66FR 30631). This temporary extension was necessary because China's permanent NTR, enacted by P.L. 106-286 , willenter into force only after China's accessionto the WTO. H.J.Res. 50 to disapprove the extension of China's Jackson-Vanik waiver was introduced June 5, 2001,by Rep. Rohrabacher, and a hearing on thesubject was held by the Ways and Means Trade Subcommittee on July 11, 2001. H.J.Res. 50 was reported adverselyon July 18, 2001, (18) and defeated (169 - 259)in the House on July 19, 2001, allowing China's J-V waiver (and nondiscriminatory status) to remain in forcethrough July 2, 2002.

Particularly since--and to some extent despite--the Tiananmen Square incident of June 4, 1989, the U.S. Congress has considered two diametrically opposedtypes of action regarding China's nondiscriminatory, or most-favored-nation (MFN; normal-trade-relations) tariffstatus in trade with the United States. One hasbeen its total withdrawal, the other--of more recent origin--its extension on a permanent basis. After having beensuspended in 1951, China's MFN tariff statuswith the United States was restored in 1980 conditionally under Title IV of the Trade Act of 1974, includingcompliance with the Jackson-Vanikfreedom-of-emigration amendment, which must be renewed annually, and the existence in force of a bilateral tradeagreement between the two countries. Thisstatus would be either terminated or changed into a permanent one. China's loss of MFN tariff status would result principally in the imposition of substantially higher U.S. customs duties on--and in higher, often prohibitive, costsof--over 95% of U.S. imports from China ($99,580.5 million total in 2000) and a likely cutback in such imports aswell as possible retaliatory reduction by Chinaof its imports from the United States. A significant economic disadvantage might result for Hong Kong and Macau,which, despite their political reunificationwith China, remain separate economic entities with permanent U.S. MFN status. Sundry legislation introduced in earlier Congresses to withdraw or severely restrict China's MFN status failed to be enacted, in two instances for failure tooverride the President's veto. In the 105th Congress, legislation was introduced, but not passed, to grant permanentMFN status to China outright or upon itsaccession to the World Trade Organization. Some of the permanent-MFN bills would have placed additionalconditions or restrictions on the grant of the MFNstatus. Legislation in the 106th Congress reflected China's prospective accession to the WTO. On one hand, it prohibited U.S. support of China's admission to the WTOwithout Congress's legislative approval and, moreover, in two instances required the United States to withdraw fromthe WTO if China was admitted to it withoutthe U.S. support. On the other hand, like in prior years, Congress failed to pass legislation disapproving thePresident's mid-year renewals of China'sJackson-Vanik waiver and, moreover, enacted legislation (Title I, P.L. 106-286 ) approving permanentnondiscriminatory status for China upon its accession to theWTO. On January 30, 1998, the President extended the trade agreement with China for 3 years, and on June 1, 2001, renewed for one year China's Jackson-Vanik waiverand, thereby, its temporary nondiscriminatory status. Legislative action to disapprove the waiver renewal wasdefeated in the House.

The Greek city-state of Athens is believed to have developed the first known democracy around 500 B.C. Modern Greece has been a democracy since the toppling of a military junta in 1974. Since then, two large parties have alternated leadership of the government: the New Democracy (ND) party and the PanHellenic Socialist Movement (PASOK). ND was in power from March 2004 until October 2009.In the September 2007 national elections, held after the government was criticized for poor performance in fighting widespread fires and some officials were implicated in corruption scandals, ND was able to eke out only a slim majority of 152 seats in the unicameral 300-seat parliament. At the time, PASOK also suffered losses, while three small parties on the left and right registered significant gains and won seats. One of these, the ultra-nationalist, anti-immigrant Popular Reforming and Orthodox Rally (LAOS) party, entered parliament for the first time. After the 2007 election, ND lost one seat in parliament and its position declined due partly to additional corruption scandals, a crisis of law and order, and the economic situation. An ongoing scandal over the Siemens Group's alleged bribery of politicians and officials sullied both major parties. Then, in September 2008, Merchant Marine Minister George Voulgarakis resigned amid allegations that government ministers had helped a monastery trade inexpensive land for prime real estate, at a cost of an estimated $130 million to the government. In October, the same scandal led to the resignation of State Minister and government spokesman Theodoros Roussopoulos, a close associate of then Prime Minister Constantine (Costas) Karamanlis. Perhaps more significantly, the government's ability to ensure public security came into question. In December 2008, police fatally shot a teenage boy, provoking days of violent protests by anarchists, students, and labor groups in Athens and elsewhere. It was the worst rioting in years, and its duration generally was attributed to socioeconomic causes (i.e., the youths' joblessness and lack of hope), although a culture of impunity also was blamed. Critics castigated the government for its passive response and slowness in reestablishing law and order. In June 2009, the murder of a police officer who was a member of the counterterrorism squad protecting a witness in a trial involving a terrorist group again highlighted the government's deficiencies in this area. PASOK polled ahead of ND in public opinion surveys throughout 2008 and 2009, and PASOK leader George Papandreou repeatedly called for early elections. PASOK came in first, and the LAOS registered striking gains in the European Parliament elections of June 2009. In August, Greece again experienced terrible fires and, while they were not as severe as in 2007, some criticized the government for its alleged failure in the intervening years to improve fire protection or to establish better coordination of fire-fighting efforts. The government blamed extremely strong winds for the destruction. Other observers said that the government had mobilized assistance from the European Union (EU) and from individual European governments. The president is head of state, but the prime minister is head of government and exercises most powers. In February 2005, former Foreign Minister Karolos Papoulias, the ND consensus candidate and a founding member of the opposition PASOK, won the presidency with 279 out of 296 votes cast in parliament. His term expires in March 2010. On September 3, 2009, Prime Minister Karamanlis called for early national elections because, he said, he wanted to avoid a protracted pre-election period. Parliamentary elections had been scheduled for September 2011 and now would take place on October 4, 2009. Karamanlis claimed that PASOK had "forced" the early election when it announced that it would not support President Papoulias for reelection. Without PASOK, Karamanlis's ND party would not have sufficient votes in parliament to reelect the president and a national election would have been required in order to reconstitute parliament so that a new president could be elected. Thus, the election campaign would have lasted for at least six months. ND's election prospects were bleak from the outset of the campaign as the economy was experiencing a recession. At the same time, the European Commission estimated that Greece's 2009 budget deficit would be 8% of gross domestic product (GDP), well above the 3% ceiling that the EU mandates for members, and the national debt would be 110% of GDP. (These estimates have since risen.) By October 24, Greece was supposed to present to the EU a package of measures aimed at restructuring its public finances and cutting its fiscal deficit to 3.7% by the end of 2009, which few considered feasible. In addition, commentators and opposition politicians had criticized the government for what they claimed was its poor performance in fighting fires again in August. (However, others thought that the government had mobilized rapidly, but that extreme winds had affected the effectiveness of fire-fighting.) Critics also assailed the government for its failure to improve law and order in the face of domestic terrorism and anarchism. To help Greece overcome its financial crisis, Prime Minister Karamanlis presented an economic plan on September 5. It called for cuts in public spending, freezing public-sector wages and pensions, combating tax evasion, and structural changes. Critics wondered why the party had not done all that in its six years in office, although its one-seat majority in parliament probably constrained boldness. The plan could not have appealed to voting public-sector workers and pensioners. On September 12, PASOK leader Papandreou presented a program for his first 100 days in office, calling for boosting demand with pay increases above the rate of inflation, extra pay for lower incomes, protection of borrowers and households in debt, combating price increases in the market, freezing utility rates for one year, and passing tax reforms to promote redistribution of income. He also proposed increases in public investments, supporting employment by subsidizing social security contributions for new hires of unemployed persons, and increasing unemployment benefits. The PASOK stimulus plan had a price tag EUR3 billion or U.S.$4.38 billion. Papandreou said that he would fund it with better tax collection, with the EU's National Strategic Reference Framework (ESPA) cohesion policy funds, and public-sector real estate. The smaller parties also presented their views. LAOS leader George Karatzaferis sounded nationalist and populist themes, calling for EU help in guarding Greece's borders against illegal immigrants, the establishment of a quota for immigrants, and stronger policies to combat "the Turkish threat." He attributed a large percentage of what he asserted was a rising crime rate to illegal immigrants. Meanwhile, at the outset of the campaign, the Coalition of the Radical Left (SYRIZA) survived a leadership dispute with the main party in its alliance, the Coalition of the Left Movements and Ecology's (Sinapismos/SYN). SYN President Alexis Tsipras demanded to lead both SYRIZA and SYN, but other parties in SYRIZA resisted, and some wanted the head of SYRIZA's parliamentary group and former head of SYN, Alekos Alavanos, to head the list. SYRIZA entered the elections without a leader at the head of its list and Alvanos did not run for parliament. In the end, it was widely believed that Greeks voted against the ND government more than for PASOK. Voter turnout was 70.92%, down slightly from 74.14% in 2007. Karamanlis resigned as ND leader and assumed a seat as a Member of Parliament from Thessaloniki. His successor is former Culture Minister Antonis Samaras. Prime Minister Papandreou proposed a smaller cabinet, created the new post of Vice President, and reconfigured several ministries. The Ministry of Economy, Competitiveness, and Shipping has been created from some elements of the former Merchant Marine, Aegean, and Island Policy Ministry and others from the former Economy and Finance Ministry. The Ministry of Citizens' Protection took over responsibility for public order from the Interior Ministry along with parts of Merchant Marine Ministry's marine safety and other components. Greece has a mixed capitalist economy, with the public sector accounting for about 40% of the gross domestic product (GDP). In its first term, the ND government cut the budget deficit and taxes on corporations, and was able to raise tax revenues due to an average annual growth rate of 4% and a crackdown on tax evasion. Unemployment decreased at first, but 20% of the population remained below the poverty level. ND also passed some social security reforms, despite political opposition and labor protests. The European Commission wants even more action in this area. Greece sustained its growth due to booms in tourism and shipping. (Greece has the largest merchant marine in the world.) It also plans to ensure its own energy security as well as become a major "energy corridor" with the Turkish-Greece-Italy (TGI) natural gas pipeline, the Burgas (Bulgaria)-Alexandroupolis oil pipeline, the South Stream natural gas pipeline from Russia to Europe, and a gas pipeline between Greece and Bulgaria. However, during the brief second ND term, Greece began experiencing the effects of the global financial crisis and recession, which hurt shipping and tourism among other key sectors. GDP has contracted for three consecutive quarters in 2009. Almost all industrial sectors have seen declines. Unemployment hit 9.6% in July and is expected to grow. Moreover, Greece is facing a crippling projected budget deficit of more than 12% of GDP and a debt in excess of 125% of GDP for 2010. As of December 2009, the Finance Ministry stated that the debt was a record EUR300 billion (U.S.$442 billion). Credit rating agencies have downgraded the debt, meaning that it will be more difficult for Greece to find lenders and cost it more to borrow. The Papandreou government expects to submit a revised Stability and Growth Program to the EU in January 2010, with measures to reduce spending, increase revenues, and resume growth. Its 2010 budget reduces operational expenditures by 10%, suspends public sector hiring except in "sensitive" sectors, and proposes economic reforms. The economy benefits from Greece's membership in the EU and the euro zone. Greece received an estimated $8 billion annually from the EU between 2000 and 2006 and will receive another $24 billion for 2007-2013. Participation in the euro zone is believed responsible for controlling inflation. Greek authorities have worked to dismantle two main domestic terrorist groups, the Revolutionary Organization 17 November (17N) and Revolutionary Popular Struggle (ELA). The U.S. State Department lists 17N, which was responsible for the murders of five U.S. embassy employees in Athens, beginning with CIA station chief Richard Welch in 1975, as a Foreign Terrorist Organization (FTO). Although arrests and convictions of 17N leaders and members have been made since 2002, retrials and acquittals have led to the release of some of those convicted. Neither 17N nor ELA has been active for several years. Possible copycats, successor groups, or renamed cells of the older groups such as Revolutionary Struggle (EA) and Popular Revolutionary Action (LED) are active, as are small anarchist and anti-globalization groups, which operate mainly in the Athens area. A January 12, 2007, rocket-propelled grenade attack on the U.S. Embassy in Athens caused no casualties and did little material damage. EA claimed responsibility. In 2009, attacks by Revolutionary Struggle have become more frequent. In September, it claimed responsibility for a car bomb attack at the Athens Stock Exchange that caused widespread damage and injured a security guard. In June 2004, parliament passed a law to implement the common EU counterterrorism policy. In January 2006, Greece began using new, more secure passports with biometrics to comply with EU regulations and executing EU-wide arrest warrants. It also ratified the extradition agreement between the United States and EU. The Greek navy participates in Operation Active Endeavor, NATO's antiterrorism ship monitoring effort in the Mediterranean Sea. Greece is a member of the EU and NATO. In addition to participating in NATO's Operation Active Endeavor and the International Security Assistance Force in Afghanistan, Greece also is engaged in EU missions such as the EU Military Force in Bosnia and Herzegovina (EUFOR--Operation ALTHEA) and the EU Rule of Law Mission in Kosovo (EULEX). It also has military observers as part of an Organization for Security and Cooperation in Europe (OSCE) force in Georgia and, in January 2009, Greece assumed the rotating presidency of that organization. The Republic of Cyprus has been partitioned between the Greek Cypriot south and the Turkish Cypriot north since Turkish forces invaded in 1974 in response to a coup on the island backed by the Greek junta, which favored uniting Cyprus and Greece. Greece strongly supports its Greek Cypriot ethnic kin in their efforts to reunify the island. In November 2002, U.N. Secretary General Kofi Annan offered a draft settlement plan to unite Greek Cypriots and Turkish Cypriots in a loosely federated United Republic of Cyprus. Prime Minister Karamanlis cautiously stated on April 15, 2004, that the plan's "positive points can prove to be superior to the negative ones," adding that it was up to the Cypriots to decide and that Greece would support their decision. On April 24, 2004, 76% of Greek Cypriots rejected the "Annan Plan," while 65% of Turkish Cypriots accepted it. The settlement process then stalemated. In July 2005, Turkey extended its customs union with the EU to all new members, including Cyprus, but did not recognize the Republic of Cyprus or open its ports to Greek Cypriot ships. Greece has seconded the Greek Cypriots' demand that Turkey recognize Cyprus de jure and fully implement the customs union. It welcomed the renewal of the settlement process in March 2008, and has supported Republic of Cyprus President Dimitris Christofias in his direct talks with Turkish Cypriot leader Mehmet Ali Talat, which have been conducted under U.N. auspices since September 2008. Greece secured its independence from the Ottoman Empire, the precursor of modern-day Turkey, in 1832. The two neighbors historically have had strained relations, but began a period of rapprochement in 1999. In order for Turkey to become a more stable and peaceful democracy, Athens supports Turkey's full membership in the EU if it meets EU standards. Greece and Turkey share interests in regional peace, growing bilateral trade ($2.8 billion in 2008), a natural gas pipeline, and combating terrorism and illegal immigration. Greece is now the fourth-largest investor in Turkey. In 2006, the National Bank of Greece purchased Turkey's fifth-largest bank for $2 billion. Prime Minister Karamanlis visited Turkey in January 2008, becoming the first Greek prime minister to visit in almost 49 years. However, a number of issues remain impediments to greater progress in normalizing bilateral relations. They include the unresolved Cyprus dispute, the failure of Ankara to authorize the reopening of the Greek Orthodox Theological Seminary on the Turkish island of Halki and its refusal to recognize the ecumenical (worldwide) status of the Greek Orthodox Patriarch whose seat is in Istanbul, and what some Greeks consider Turkey's suspicious advocacy and political support for Muslims of Turkish origin in Greek Thrace. Sharp differences over Aegean Sea sovereignty issues produced major crises in 1987 and 1996 that appeared to bring the two neighbors to the brink of military conflict. In order to avoid similar developments in the future, Greece and Turkey have held more than 40 rounds of exploratory talks concerning disputes over air space, territorial seas, continental shelf, and related issues over several years. Both sides appear satisfied with continuing talks, which have produced neither resolution nor conflict. Greece did not take its disagreements with Turkey to the International Court of Justice (ICJ) in December 2004, as proposed at the 1999 EU summit in Helsinki which reaffirmed Turkey's candidacy for EU membership. Greece accepts the Court's jurisdiction, but Turkey does not. Greece officially recognizes only a dispute over the continental shelf and, in July 2009, its Foreign Ministry reiterated readiness to refer that one issue to the Court. Athens also wants Ankara to rescind a 1995 casus belli parliamentary authorization of any steps, including military ones, if Greece exercises a right to a 12-mile territorial sea as allowed under the Law of the Sea Treaty. Greece is a signatory of the Treaty; Turkey is not. In addition, Greece objects to Turkey's repeated infringements of Greece's claimed 10-mile air space over the Aegean and to Turkish commanders' references to (Greek) Aegean islands/islets not named in treaties as "gray zones" that must be demilitarized. Territorial disputes appear to be surfacing more frequently and serve to highlight the continuing lack of a solution. Some emanate from each country's desire to explore for oil. On October 10, 2009, Prime Minister Papandreou, who had been one of the fathers of the Greek-Turkish rapprochement in 1999 when he was foreign minister along with the late Turkish Foreign Minister Ismail Cem, made a lightning visit to Istanbul for a meeting with fellow ministers from southeastern Europe. It was his first trip abroad taken in his capacity as foreign minister. The former Yugoslav republic of Macedonia declared its independence in 1991. Its territory covers 39% of the historic region of Macedonia; the remaining 51% is in Greece and 9% is in Bulgaria. Macedonia asserts its right to use and be recognized by its constitutional name, the Republic of Macedonia. Greece objects, claiming that the name usurps Greece's heritage and conveys irredentist ambitions against Greece's largest province, also called "Macedonia," which borders the former Yugoslav republic. Due to Greek objections, Macedonia joined the U.N. in 1992 under the provisional name of The Former Yugoslav Republic of Macedonia (FYROM), which is how Greece refers to it. In 1995, Athens and Skopje signed an interim agreement to normalize relations and settle all outstanding disputes except for the name, and Greece ended an 18-month long trade blockade of FYROM. Since then, officials of both governments have met with the U.N. Secretary General's personal envoy, U.S. lawyer Matthew Nimetz, to discuss the name, but have not reached a mutually acceptable solution. Greek officials call for a compromise composite name with a clear geographic qualifier (e.g., Republic of Northern Macedonia) to be used internationally. They reject the suggestion that one name be used solely in Greek-Macedonian bilateral relations and another internationally. In April 2008, Greece, whose position is "no solution means no invitation" for Macedonia to join NATO and the EU, prevented NATO from reaching a consensus on extending an invitation to Macedonia to join the alliance because no solution to the name dispute had been found. Athens argued that, because of that situation, Macedonia had failed to meet what Greece said was the criterion of "good neighborliness" required of new NATO members. The international trend in name usage favors Macedonia, with 125 governments recognizing it as the Republic of Macedonia. The government of Macedonia has said that it would never renounce the achievement of this recognition. Despite the name problem, Greece is the top investor in the FYROM and bilateral trade is strong. At the same time, however, Macedonian Prime Minister Nikola Gruevski appeared to exacerbate bilateral relations with a spate of actions. In July 2008, he sent a letter to Prime Minister Karamanlis calling on him to recognize a "Macedonian minority" in Greece, with a basic right to be educated in its mother tongue (Macedonian). Greece recognizes only a Muslim minority as called for in the 1923 Treaty of Lausanne and described the letter as "provocative." Foreign Minister Bakoyannis charged that Gruevski was "trying to deliberately undermine" the name negotiations by inserting onto the agenda an "alleged Macedonian minority," whose existence Greece does not recognize. In his reply, Karamanlis declared, "There is no 'Macedonian' minority," and called on Gruevski to leave behind "nationalist formulas of a bygone era." A month later, Gruevski wrote to the U.N. Secretary General and to Nimetz, requesting that recognition of the Macedonian Orthodox Church be included in the name discussions. Nimetz said, "We are dealing with the name of the country and (not) ... with the national or with other personal identities of people." Finally, in November, Macedonia filed a complaint with the International Court of Justice (ICJ) charging that Greece had violated the 1995 Interim Accord because Article 11 obliged it not to object to Macedonia's application to international organizations of which Greece is a member (e.g., NATO). Greece said that it would respond with evidence that Skopje has failed to adhere to the 1995 agreement. Prime Minister Papandreou agrees with Karamanlis's position regarding the negotiations with the FYROM. Officials in the new government have said that the FYROM's entry into the EU is conditional on a solution to the name issue and, due to Greece's insistence, the EU has postponed a decision on Macedonia's candidacy. However, Papandreou does have sufficient political capital at this stage in his tenure to compromise on the issue should he wish to do so. Greeks and Serbs have particularly close ties based on their common Orthodox Christianity, their alliance during the 20 th -century Balkan wars, and Greek empathy during the division of Yugoslavia. Greece hopes that Serbia and all of its Balkan neighbors eventually will become EU members in order to strengthen regional stability. Greece sought a U.N. Security Council-legitimized, mutually acceptable agreement on Kosovo to reassure Serbia and protect Kosovar Serbs. Therefore, it opposed Kosovo's unilateral declaration of independence--perhaps also wary that it might set a precedent for northern Cyprus. Athens has a liaison office and not an embassy in Pristina, as it still does not recognize Kosovo's independence. Greece sent a 20-member military team to join an OSCE observer force in Georgia in August 2008, in the aftermath of the Georgia-Russia conflict. Athens does not recognize the Russian-backed independence of the secessionist Georgian regions of South Ossetia and Abhazia. Greece's policies towards Kosovo, South Ossetia, and Abhazia, and to a great extent Cyprus, are consistent with its support for the inviolability of international borders. In response to domestic critics, the Papandreou government has defended Greece's participation in NATO's Afghan mission in terms of its own national interests: providing diplomatic prestige, proving Greece's reliability, and adding to Greece's effectiveness in managing its own national issues. Yet, the government may find its ability to support even limited commitments for Afghanistan severely constrained due to the ongoing economic crisis. Greece's participation in the NATO mission is limited. The European Council on Foreign Relations lists Greece among the countries that have "underperformed" in Afghanistan. According to the IISS Military Balance, 2009 , Greece has an engineering company of 137 soldiers and one C-130 Hercules transport aircraft in Afghanistan. Former Defense Minister Evangelos Meimarakis argued that Greece is unable to send more troops or equipment to Afghanistan because of its own defense commitments, which usually refers to confronting a perceived threat from fellow NATO member Turkey. In particular, Greece believes that it cannot redeploy aircraft and helicopters from the Aegean Sea, where it accuses Turkey of violating Greek airspace and territorial waters. Perhaps as a gesture to President Obama at the beginning of his administration, on April 4, 2009, former Greek Prime Minister Costas Karamanlis restated plans that had already been in motion. A Greek mechanized company would assume command of Kabul International Airport in 2010, with a reinforced strength of 30-40 officers. Until then, seven Greek soldiers were to be sent to assist other international forces already at the airport. If and when the airport is transferred to the Afghans, the mechanized company would move to the western province of Herat under Italian command. Officials suggested that these forces then would be closer to combat because more armed clashes occur in Herat. A battalion specialized in bridge construction already had deployed. In addition, Greece would return a medical unit to the field and a special unit would deploy to Kabul to train Afghan police officers. Former Defense Minister Meimarakis also said that Greece was willing to train Afghan soldiers in Greece. Soon after it took power, the Papandreou government modified these plans. In particular, it declared that forces based in Kabul would not relocate to an area of higher risk (e.g., Herat) as had been anticipated by its predecessor. However, two medical units probably would deploy. On March 31, 2009, former Foreign Minister Dora Bakoyannis called for a more prominent civilian presence in Afghanistan to assist with education, culture, economic development, and agriculture. Greek non-governmental organizations are involved in such programs. On September 22, the Greek Ambassador to NATO presented EUR300,000 (approximately U.S.$438,000) to his Hungarian counterpart to support development projects being implemented by the Hungarian PRT in Baghlan province, including building an outpatient clinic and rebuilding and equipping a school. In 2007, Greece had donated EUR500,000 (approximately U.S.$700,000) to Hungary for similar purposes. Despite the financial constraints noted above, the Papandreou government may opt to continue to contribute some funds for Afghan reconstruction in order to ease pressure from NATO allies. U.S.-Greek bilateral relations are good and are based on historical, political, cultural, military, economic, and personal ties. The active, well-organized Greek-American community advocates pro-Greek positions and seeks close U.S.-Greek ties. The State Department refers to Greece as a "strategic partner," and Greece and the United States share interests in stability in southeastern Europe. Since the 1960's, the United States has operated a Naval Support Activity for the United States and NATO at Souda Bay on the Greek island of Crete under the terms of a mutual defense cooperation agreement (MDCA). The activity is a tenant of the Hellenic Air Force and supports U.S. Sixth Fleet Aircraft, U.S. Navy Air Detachments deployed at Souda, and transient U.S. military aircraft. In addition, an estimated 430 U.S. ships to visit the base annually for servicing. A NATO Missile Firing Installation, used for testing, is located nearby. The Greek government responded to the September 11, 2001, terrorist attacks on the United States with strong political support, unimpeded U.S. and coalition use of Greek airspace, and military assets for counterterrorism. Like some other EU countries, Greece does not view the war in Iraq as part of the war against terror and is not part of the coalition there. It refused to participate in training the Iraqi army in either Iraq or Greece and, along with five other EU member countries, refused to allow its military personnel assigned to NATO's international command staff to join a senior officer training mission in Iraq. It did, however, send military personnel to train Iraqis at a camp in Bulgaria and 100 BMP-1 armored personnel carriers to Iraq to help equip the Iraqi armed forces. It also contributed financially to the cost of training Iraqi police and provided Greek commercial ships to transport NATO military equipment to Iraq. In addition, Greece provided some humanitarian and development assistance to Iraq. U.S. aid for Greece has not been a major element in the bilateral relationship since the 1990's. In response to the 2007 wildfires, the U.S. Agency for International Development Office of Foreign Disaster Assistance (OFDA) provided more than $600,000 in emergency aid and $1.35 million through agreements with the U.S. Forest Service to implement a technical assistance program through the remainder of 2007 and throughout 2008. In FY2008, Greece also received $443,000 in International Military Education and Training (IMET) funds. In FY2009, it is receiving an estimated $100,000 for IMET, and the Administration has requested $100,000 in IMET funds for Greece for FY2010. The United States has encouraged the rapprochement between Greece and Turkey, believing that direct bilateral talks are the best route to normalized relations. Both Greece and Turkey participate in the U.S.-initiated Southeast Europe Brigade (SEEBRIG), a rapid-reaction force consisting of contingents from seven regional countries. At the same time, there have been some tensions in U.S.-Greek relations. In November 2004, Greece responded with a demarche when the United States formally recognized the FYROM as the Republic of Macedonia. The State Department said that the decision was not directed against Greece but intended to bolster Macedonia's stability and ensure its path toward a multiethnic, democratic state within its existing borders. President Bush added that the United States still would embrace any name that emerges from negotiations between Athens and Skopje. The Bush Administration supported the U.N.-assisted negotiations. Because the United States strongly supports Macedonia's integration in the Euro-Atlantic community, it regretted Greece's lack of agreement to a NATO invitation to Macedonia because the name issue was unresolved. Then Assistant Secretary of State for European and Eurasian Affairs Daniel Fried stated that the Administration would even have accepted a NATO invitation to Macedonia as the FYROM. Greece is one of only a few remaining EU member states not part of the U.S. Visa Waiver Program (VWP), which allows short-term visitors to enter the United States without a visa. Greece had failed to meet the eligibility criteria by the time the program was frozen after 9/11. After the Greek government began issuing the more secure passports in 2006, it made joining the VWP a high priority. The Department of Homeland Security is conducting a process to include Greece in the VWP. H.R. 2261 , introduced on May 5, 2009, would designate Greece a program country for the purpose of the VWP. On June 16, 2009, Assistant Secretary of State for European and Eurasian Affairs Philip Gordon told the House Foreign Affairs Committee that he thought that the process was near an end. Greece values its role as an international energy hub in order to guarantee its own energy security and to collect transit fees. Yet, the Bush Administration was concerned about planned Greek energy links to Russia (i.e., the Burgos-Alexandroupolis oil pipeline from Russia via Bulgaria to Greece and the South Stream natural gas pipeline from Russia, Bulgaria, and Greece to Italy and Austria). This was because the Administration thought that the pipelines would increase Greek dependence on Russia, which already supplies 80% of its natural gas, and undermine efforts to ensure Europe's energy security by diversifying sources from excess dependence on Russia. In line with this view, the Bush Administration welcomed plans for the Turkey-Greece-Italy (TGI) pipeline that will bypass Russia to supply Azerbaijani natural gas to Europe. The Obama Administration's Special Envoy for Eurasian Energy Richard Morningstar has said that the Administration is neither "for" nor "against" South Stream. Although official U.S.-Greek relations are generally cordial, there is a strong strain of anti-Americanism in Greece, stemming from U.S. support for the Greek military junta that ruled from 1967-1974 and perceptions of U.S. failure to prevent the Turkish invasion of/intervention in Cyprus in 1974, among other issues. Unsupported allegations of U.S. interference in domestic Greek political affairs surface regularly. Anti-American sentiment is manifest in periodic mass demonstrations mobilized by Communists, anarchists, unions, antiwar activists, and anti-globalization forces, whose influence is disproportionate to their numbers in society.

The Greek city-state of Athens is believed to have developed the first known democracy around 500 B.C. Modern Greece has been a democracy since the toppling of a military junta in 1974. Since then, the New Democracy (ND) party and the PanHellenic Socialist Movement (PASOK) have alternated leadership of the government. ND ruled from March 2004 until October 4, 2009, when PASOK won national elections and a clear majority of the seats in parliament. PASOK's victory has been attributed to anti-ND public sentiment caused by the economic recession, corruption scandals, and law-and-order issues. On taking power, PASOK inherited a severe financial crisis: economic growth has contracted for three consecutive quarters in 2009, and the budget deficit is projected to be 12.7.% of gross domestic product (GDP) and debt to be 125% of GDP in 2010. Therefore, the economy is the dominating issue on the government's agenda. The Greek government's foreign policy focuses on the European Union (EU), sometimes-strained relations with Turkey, reunifying Cyprus, resolving a dispute with Macedonia over its name, other Balkan issues, and sustaining good relations with the United States. Greece has assisted with the war on terrorism, but is not a member of the U.S.-led coalition in Iraq and has a limited presence with NATO in Afghanistan. See also CRS Report RL33497, Cyprus: Status of U.N. Negotiations and Related Issues, by [author name scrubbed].

Under federal law, corporations and most other legal entities may be criminally liable for the crimes of their employees and agents. This is true in the case of regulatory offenses, like crimes in violation of the Federal Food, Drug, and Cosmetic Act; it is true in the case of economic offenses, like crimes in violation of the securities laws; and it is true in the case of common law crimes, like keeping a house of prostitution in violation of the Mann Act. Ordinarily, the agents and employees who commit the crimes for which their principals and employers are liable also face prosecution and punishment. Most federal criminal statutes apply to "whoever," or to any "person" who violates their prohibitions. Although, in ordinary parlance, the word "person" usually refers to a human being, the law often gives it a broader meaning. The Dictionary Act provides that "In determining the meaning of any Act of Congress, unless the context indicates otherwise ... the words 'person' or 'whoever' include corporations, companies, associations, firms, partnerships, societies, and joint stock companies, as well as individuals." The courts have used the Dictionary Act definition to give meaning to the words "person" or "whoever" in the context of a criminal statute. Federal statutes frequently provide individual definitions of the entities that fall within their proscriptions. Some are as terse as that of the racketeering statute, "'person' includes any individual or entity capable of holding a legal or beneficial interest in property." Others, like the tax crime definition, are more detailed. Still others have taken special care to mention governmental entities when listing those covered by their proscriptions. Corporate criminal liability is ordinarily confined to offenses (a) committed by the corporation's officers, employees, or agents; (b) within the scope of their employment; and (c) at least in part for the benefit of the corporation. The judicial test for whether an activity falls within the individual's scope of authority is whether the individual engages in activities "on the corporation's behalf in performance of [his] general line of work.... those acts must be motivated, at least in part, by an intent to benefit the corporation." If the standard is met, the corporation will be liable notwithstanding the fact that it expressly directed its agent, employee, or officer not to commit the offense at issue. As a general rule, the courts have held that "[c]orporations may be held liable for the specific intent offenses based on the 'knowledge and intent' of their employees." Again, the rule extends only to those instances when the employee or agent acted, or acquired knowledge, within the scope of his or her employment, seeking, at least in part, to benefit the corporation. The law is somewhat more uncertain when a corporation's liability turns not upon the knowledge or the intent of a single employee but upon cumulative actions or knowledge of several. With rare exception, statutes which expose a corporation to criminal liability do not absolve the officers, employees, or agents whose violations are responsible for the corporation's plight. From time to time, the courts have encountered the argument that an individual cannot be at once both the person who violates the statute and the personification of the corporation that violates the statute: "[W]hen the officer is acting solely for his corporation, the appellee contends that he is no longer a 'person' within the Act. The rationale for this distinction is that the activities of the officer, however illegal and culpable, are chargeable to the corporation as the principal but not to the individual who perpetrates them." To which the courts have responded, "No intent to exculpate a corporate officer who violates the law is to be imputed to Congress without clear compulsion." Conspiracy raises a slightly more difficult issue. Conspiracy is the agreement of two or more persons to commit some other federal crime. Although the courts have sometimes recognized an intracorporate defense in civil conspiracy cases, they have concluded that a corporation and each of the participating individuals may be liable for plots among two or more of the corporation's officers or employees. On the other hand, a "corporate officer, acting alone on behalf of the corporation, [may] not be convicted of conspiring with the corporation." Conspiracy also presents one of the three situations in which corporate officials and employees may face criminal liability under federal law even though they themselves did not commit, and perhaps did not even know of, the misconduct of other officers or employees. Thus, though an officer or employee has no direct hand in the matter, he is liable for foreseeable offenses committed by one of his co-conspirators in furtherance of their common scheme. The second situation occurs when the official or employee either instructs another to commit a federal offense or aids and abets another in the commission of a federal offense, or takes some action after the fact to conceal the commission of a federal offense by another. Like conspiracy, liability for procuring or aiding and abetting the offense of another focuses on conduct committed before the commission of the underlying substantive offense: "In order to aid and abet another to commit a crime it is necessary that a defendant in some sort associate himself with the venture, that he participate in it as in something that he wishes to bring about, that he seek by his action to make it succeed." The officer or employee must know of the colleague's pending misconduct and by his action intend to facilitate it. Moreover, unlike conspiracy, which requires at least two individuals, even a sole stockholder may be guilty of aiding and abetting the crime of a corporation. Misprision and liability as an accessory after the fact focus on conduct committed after the commission of the underlying substantive offense. Misprision requires proof that the defendant knew of the commission of a federal felony by another, and that he not only failed to report the offense to authorities but affirmatively acted to conceal it. An accessory after the fact charge requires proof that the defendant knew of the commission of a federal offense by another and assisted the other to avoid arrest, trial, or punishment. Both statutes essentially create general obstruction of justice offenses. Consequently, the specific actions which offend their prohibitions will often constitute offenses under other more specific federal obstruction statutes. The third instance of official liability triggered by the misconduct of others within the corporation requires no knowing participation, but instead occurs when a corporate official, responsible to do so, fails to prevent the commission of an offense. This is the least common of the three. It arises in the context of a regulatory scheme, crafted to ensure public welfare and capped with a criminal proscription which says nothing of the knowledge necessary for conviction. The decision to prosecute a corporation or its culpable employees or both is vested in the Justice Department. The courts will review the exercise of that discretion only in rare instances and then primarily to protect the constitutional rights of a defendant or potential defendant. The Justice Department has two sets of guidelines governing the decision to prosecute--one general ("Principles of Federal Prosecution") and the other a supplement devoted to corporations ("Principles of Federal Prosecution of Business Organizations"). As they make clear, the decision to prosecute is in fact a series of decisions. The first is whether to initiate, decline, or defer a prosecution. Here perhaps the most easily assessed factor is the strength of the case against the defendant or defendants. Prosecutors ordinarily will not initiate a prosecution unless there is probable cause to believe that a person has committed a federal crime. On the other hand, prosecutors will seriously consider initiating a prosecution if they believe that they have sufficient admissible evidence to convict. In those instances, the additional factors that influence the determination to prosecute fall into three categories: the weight of the federal interest, the prospect of effective prosecution elsewhere; and the adequacy of other alternatives. Federal Interests : Whether to proceed with a prosecutable case ordinarily turns on the nature and seriousness of the offense and the culpability of the defendants. Some crimes, such as those involving immigration, civil rights, or federal tax violations, may warrant federal prosecution because of their very nature. Others, such as those involving major fraud or illicit drug trafficking, may call for federal prosecution because of the wide-spread harm they can inflict. The critical factors when it comes to corporate liability, however, are culpability factors. The factors identified in the business organization guidelines include (1) the pervasiveness of the wrongdoing within the corporation; (2) the corporation's history of misconduct; (3) the existence and performance of compliance programs; (4) the corporation's timely and voluntary disclosure of wrongdoing; (5) the corporation's cooperation; (6) an absence of obstruction; (7) collateral consequences; and (8) restitution. In the eyes of the guidelines: "Charging a corporation for even minor misconduct may be appropriate where the wrongdoing was pervasive and was undertaken by a large number of employees, or by all the employees in a particular role within the corporation, or was condoned by upper management." Conversely, it may not be appropriate to charge a corporation, "particularly one with a robust compliance program in place, under a strict respondeat superior theory for the single isolated act of a rogue employee." Most cases will fall between the two extremes and require recourse to other factors as well. One indication of the pervasiveness of corruption within a corporation may be its involvement and response to any wrongdoing in its past. Past criminal conduct is telling, but the guidelines explain that earlier civil or regulatory enforcement actions may also be taken into account. The same may be said of the past transgressions of subsidiaries or affiliates, although short of a corporate department for the commission of criminal offenses the presence of subsidiaries or other liability-limiting features of corporate structure are not considered dispositive. As noted earlier, a corporation may be liable for employee misconduct even where it has warned its employees against committing the offense. However, both the guidelines and the U.S. Sentencing Commission's Sentencing Guidelines encourage compliance programs. While a mere "paper program" may be to little avail, a closely supervised, widely dispersed compliance program tailored to detect and prevent the offenses most likely to occur in the corporation's operational environment may have a real impact. An effective plan may reduce the chances of a prosecution and reduce the severity of the charges and any subsequent sentence should a prosecution occur. The cooperative aspects of the guidelines are among its most controversial attributes. It may be thought unseemly for a corporation to profit from the misdeeds of an employee and then escape liability by turning its benefactor over to the authorities. Moreover, the lines between rewarding cooperation and punishing the assertion of constitutional and other legal rights are not easily drawn. The guidelines point out that the Justice "Department encourages corporations, as part of their compliance programs, to conduct internal investigations and to disclose the relevant facts to the appropriate authorities." This is only one of the guideline's cooperation directives. A second is the reminder that cooperation alone does not necessarily shield a corporation from prosecution. Earlier Justice Department policies relating to corporate cooperation with federal prosecutors came under fire because of concerns that they might interfere with the Sixth Amendment rights of corporations and corporate officials. The guidelines now seek to still those concerns by emphasizing that "[w]hat the government seeks and needs to advance its legitimate (indeed, essential) law enforcement mission is not waiver of those [attorney-client and attorney work product] protections, but rather the facts known to the corporation about the putative criminal misconduct under review. In addition, while a corporation remains free to convey non-factual or 'core' attorney-client communications or work product--if and only if the corporation voluntarily chooses to do so--prosecutors should not ask for such waivers and are directed not to do so." By the same token, while corporate officials are not free to obstruct an investigation, the mere fact that a corporation pays the attorneys' fees of its officers or employees or enters into joint defense agreements will ordinarily not constitute obstruction. A corporation may also receive credit for agreeing to make victim restitution, disciplining offending employees, or addressing short-comings in its compliance program. Finally, a prosecutor may consider the adverse impact of a prosecution on innocent employees or shareholders. Prosecution Elsewhere : The general guidelines remind prosecutors that prosecution in another jurisdiction may be more advantageous, particularly when the interests of the other jurisdiction are comparatively more substantial or the prospects of a more appropriate sentence are greater. Alternatives to Criminal Trial : Prosecutors have several alternatives to criminal trial. They may accept a corporation's offer to plead guilty. They may defer prosecution of the corporation under a deferred prosecution agreement. They may accept a corporation's offer to sign a non-prosecution agreement, frequently with the intent to prosecute corporate officials or employees. They may elect to forgo prosecution in favor of civil sanctions. Finally, civil and regulatory sanctions may be available as an alternative or supplement. Whether prosecutors consider them appealing alternatives may depend in part on the severity of the misconduct and the severity of the sanctions. The factors the guidelines identify include "the strength of the regulatory authority's interest; the regulatory authority's ability and willingness to take effective enforcement action; and the probable sanction if the regulatory authority's enforcement action is upheld." The guidelines address deferred prosecution and non-prosecution agreements primarily in their plea bargain instructions. As in the case of individuals, the guidelines remind prosecutors to include at least a basic statement of facts. In the case of government contractors, the guidelines prohibit prosecutors from "negotiat[ing] away an agency's right to debar or delist the corporate defendant." They also discourage agreements that shield individual corporate officers, employees, or agents from liability. Internal memoranda guide negotiation of agreements that feature the appointment of outside experts to serve as monitors of the corporation's continued good behavior. During a criminal investigation and throughout the course of criminal proceedings, corporations and other legal entities enjoy many, but not all, of the constitutional rights implicated in the criminal investigation or prosecution of an individual. Ex Post Facto : The Constitution's ex post facto clauses condemn retroactive criminal laws. In cases involving corporate defendants, federal courts have generally proceeded directly to an ex post facto analysis, without pausing to question whether the prohibition applies to such defendants. First Amendment : The Supreme Court has stated often that corporations are entitled to First Amendment protections. "[I]n the context of political speech, the Government may [not] impose restrictions on certain disfavored speakers" be they individuals or corporations. Nor may corporations suffer content-based blanket proscriptions of their truthful speech when it relates to lawful commercial activity. Fourth Amendment : The Fourth Amendment condemns unreasonable searches and seizures. Ordinarily, a government search or a seizure is unreasonable unless it is conducted pursuant to a warrant issued on the basis of probable cause. At the turn of the 20 th century, the Supreme Court acknowledged that corporations enjoyed the protection of the Fourth Amendment when faced with boundless government subpoenas. In later cases, it found the Fourth Amendment's commands had been breached when officers seized a company's records and ledgers, once without a warrant and once with an invalid warrant. The extent of the Amendment's protection will often turn not upon the nature of the subject to the search entity but the nature of its activities and the government's purpose for the search or seizure. In a regulatory context, commercial activities, corporate or otherwise, may be subject to reasonable warrantless inspections or inquiries bereft of probable cause, under some circumstances. The courts continue to affirm, however, that corporate entities may claim Fourth Amendment protection in cases involving searches and seizures occurring on commercial premises but conducted in the course of a criminal investigation. Due Process : Of the rights which the Fifth Amendment guarantees, two have been denied corporations. "[A] corporation has no Fifth Amendment privilege" against self-incrimination, nor does it have a right to grand jury indictment. Of the others, two--Due Process, and Double Jeopardy--have been said to protect corporations or have been construed to protect corporations. The Fifth Amendment Due Process Clause limits the governmental prerogatives of the federal government. The Supreme Court has said long and often that a corporation is a "person" for purposes of the Fourteenth Amendment. Moreover, the courts have acknowledged the access of corporations to various due process rights, for example, the right to challenge a court's personal jurisdiction over them or "the right to be heard at a meaningful time and in a meaningful manner before being deprived of a protected interest in liberty or property." On the other hand, the Supreme Court has said that the states of the United States are not "persons" for Fifth Amendment Due Process Clause purposes. The lower federal courts have followed suit with observations that neither the political subdivisions of the states nor foreign governments are "persons" for purposes of the Due Process Clause. Double Jeopardy : The circuit courts have concluded that corporations are entitled to Fifth Amendment protection against double jeopardy. In addition, the Supreme Court has upheld a corporation's double jeopardy challenge without recognizing the right in so many words. Sixth Amendment : The Sixth Amendment guarantees anyone accused of a federal crime several rights: the right to notice of the charges, to the assistance of counsel, to a public and speedy trial before a jury where the crime occurred, to call witnesses, and to confront his accusers. The text implies the rights are available to anyone, corporate or otherwise, accused of a crime. A corporation accused of a crime has the right to the assistance of counsel in its defense. A corporation, however, is not entitled to appointment of counsel at public expense to represent it. The Sixth Amendment assures the accused that he will be "informed of the nature and cause of the accusation." Rule 7(c)(1) of the Federal Rules of Criminal Procedure carries forward the assurance regardless of whether the accused is charged by indictment or information. In the presence of prejudicial pre-trial publicity or inflamed public sentiment, the right to a public trial may conflict with an accused's Fifth Amendment due process right to a fair trial and his Sixth Amendment right to trial by an impartial jury. Moreover, "the public trial right extends beyond the accused and can be invoked under the First Amendment." The courts use a balancing test to determine whether an accused has been denied his right to a speedy trial. The analysis consists of weighing "the length of [the] delay, the reason for the delay, the defendant's assertion of his right, and [the extent] of prejudice to the defendant [caused by the delay]." The courts have used this constitutional analysis when the accused is a corporation. It is in this context, that the corporate right to a public trial is most often asserted. The Sixth Amendment assures an accused of the right to a jury in serious criminal cases. In three cases involving legal entities--two labor unions and a corporation--the Supreme Court made it clear that an accused facing a substantial criminal fine has the right to a jury trial. By virtue of the Sixth Amendment and Article III, all federal criminal trials must be held in the state and judicial district in which the crime occurs. The venue standards which the courts use for individuals and for corporations are the same. The accused in a criminal proceeding enjoys the rights under the Sixth Amendment "to be confronted with the witnesses against [and] to have compulsory process for obtaining witnesses in his favor." The right to confrontation includes the instruction that "testimonial statements of witnesses absent from trial can be admitted only where the declarant is unavailable, and only where the defendant has had a prior opportunity to cross-examine. Under the right to compulsory process "at a minimum, ... criminal defendants have the right to the government's assistance in compelling the attendance of favorable witnesses at trial and right to put before the jury evidence that might influence the determination of guilt." The rights ensure the integrity of the criminal fact-finding process. The sparse case law suggests they are available to corporations. Eighth Amendment : The Eighth Amendment states that excessive fines may not be imposed. A fine is excessive if it is grossly disproportionate to gravity of the crime for which the defendant was convicted. A few courts avoid the question by noting that the Supreme Court has never decided whether the Eighth Amendment applies to corporations. Others have ruled against corporations on the merits. Corporations cannot be incarcerated. Otherwise, corporations and individuals face many of the same consequences following conviction. Corporations can be fined. They can be placed on probation. They can be ordered to pay restitution. Their property can be confiscated. They can be barred from engaging in various types of commercial activity. Corporations and individuals alike are sentenced in the shadow of the federal Sentencing Guidelines. Federal courts must begin the sentencing process for felonies or class A misdemeanors with a calculation of the sentencing ranges recommended by the Sentencing Guidelines. When they impose sentence, they must consider the recommendation along with the factors prescribed in 18 U.S.C. 3553(a). Appellate courts review the sentences imposed on an abuse of discretion standard and will overturn lower court sentences that are procedurally or substantively unreasonable. A sentence is procedurally unreasonable when the sentencing court fails to correctly identify and apply the appropriate Sentencing Guidelines' recommended sentencing range. A sentence is substantively unreasonable when it is unduly harsh or unduly lenient or otherwise inexpedient. The Sentencing Guidelines for organizations measure punishment according to the seriousness of the offense as well as the defendant's culpability and history of misconduct. On the other hand, they reward self-disclosure, cooperation, restitution, and preventive measures. The Guidelines supply special corporate sentencing directions for fines, probation, forfeiture, special assessments, and remedial sanctions. Fines : The corporate fine Guidelines begin with the premise that a totally corrupt corporation should be fined out of existence, if the statutory maximum permits. A corporation operated for criminal purposes or by criminal means should be fined at a level sufficient to strip it of all of its assets. On the other hand, a fine need not be imposed at all, if it would render full victim restitution impossible. Otherwise, corporations face different fine standards depending upon the offense of conviction. In chapter 8C, the Guidelines set specific standards for crimes with a commercial flavor--antitrust, smuggling, and gambling offenses, for instance. The Sentencing Commission explicitly declined to promulgate special corporate fine standards for other offenses. Instead, corporate fines for such offenses are governed by two general statutory sentencing provisions. One, SS3571, sets the permissible maximum amount for any fine. The other, SS3553, outlines the sentencing factors and procedures applicable to both individuals and corporations. The limited case law suggests that sentencing courts may disregard the Guidelines completely in the case of a corporation convicted of one of these other offenses. For the offense to which Chapter 8C's fine provisions apply, a sentencing court must begin by deciding whether the defendant entity is able to pay a fine. If so, the amount of an organization's fine is determined by the applicable offense level and the level of its culpability. An organization's offense level is calculated in the same manner as an offense level for an individual but without the adjustments for things like vulnerability of the victim or role in the offense. Unless the amount of gain or loss associated with the offense is greater, the organization's base fine is pegged at one of 33 levels corresponding to its offense level--from $5,000 for an offense level of 6 or less to $72.5 million for an offense level of 38 or more. The applicable fine range is then ascertained by multiplying the amount assigned to the offense level by minimum and maximum factors determined by the corporation's culpability score. A corporation's score sheet begins at 5. Points are added or subtracted to reflect greater or less culpability. The lowest culpability score merits a range ascertained by multiplying the offense level amount by .05 (setting the bottom of the range) and 0.2 (setting the top). Conversely, the highest culpability score merits a range ascertained by multiplying the offense level amount by 2.0 (setting the bottom of the range) and 4.0 (setting the top). The Guidelines then identify 11 factors to be considered when deciding where within the applicable range a corporation ought to be fined. The absence of an effective ethics and compliance program is perhaps the most distinctive factor on the list. The Guidelines also identify a number of circumstances that may require or argue for a fine outside of the recommended range. First, the sentence imposed must conform to statutory requirements. Thus, applicable statutory maximums or minimums trump any conflicting Guideline sentencing range boundaries. Second, the sentencing process may leave the corporation with the windfall from its misconduct. Consequently, the Guidelines recommend that the fine level be set so as to disgorge any illegally gotten gains that would otherwise be left to a corporation after the payment of its fine, compliance with the restitution order, or other remedial costs. On the other side, a fine below the recommended range should be imposed when necessary to permit restitution or may be below that range when the corporation will be unable to pay a higher fine even on an installment basis. A below-range corporate fine may also be fitting in light of individual fines imposed upon the owners of a closely held corporation. The Guidelines supply several examples of when a fine outside the recommended range might be considered. A fine above the range (referred to as upward departures) may be warranted when: (1) the offense resulted in a risk of death or serious bodily injury; (2) the offense constituted a threat to national security; (3) the offense presented a threat to the environment; (4) the offense presented a threat to the market; (5) the offense involved official corruption; (6) appropriate to offset reductions attributable to compliance programs; and (7) the corporation's culpability score exceeds the limit for additional multipliers. Departures below the range (referred to as downward departures) may be warranted when: (1) the corporation provides substantial assistance to authorities; (2) the corporation is a public entity, for example, a local governmental agency; (3) the corporation's beneficiaries (other than stockholders) are also victims of the offense; and (4) the corporation's remedial cost far exceed its gains from the misconduct. Probation : Corporations convicted of a federal crime must be placed on probation, if the court elects not to fine them. If they are fined, the court may also sentence them to probation. The court may impose a probationary term of no more than five years. In the case of felony convictions, the term must be for at least one year. The Guidelines call for probation as a means of ensuring that convicted corporations comply with their obligations to pay a fine or special assessment, make restitution, establish a compliance program, perform community service, or comply with the court's remedial orders. They also find probation appropriate when the organization committed the offense within five years of a prior similar conviction; a senior corporate official involved in the offense within five years was involved in a prior similar offense; necessary to reduce the risk of future criminal misconduct on the part of the corporation; or necessary in order to comply with the sentencing directives of 18 U.S.C. 3553(a)(2), that is, the need to reflect the seriousness of the offense, promote respect for the law, and provide just punishment, afford adequate deterrence, protect the public, and effectively provide for offender training, care, and correctional treatment. The only mandatory condition of corporate probation is a requirement that the corporation not engage in any further criminal conduct. The array of discretionary probationary conditions under the Guidelines includes requirements that the corporation: publicize its conviction at its own expense; establish and maintain a compliance program; notify its employees and shareholders of its offense and compliance program; notify or periodically report to the court or the probation service on its finances, compliance program, or involvement in government investigations or proceedings; undergo periodic audits at its own expense; or make periodic restitution or fine payments. In addition, a sentencing court remains free to impose any probationary condition that is reasonably necessary and related to the considerations prescribed for sentencing generally under 18 U.S.C. 3553(a), (b)(2). In response to a corporation's failure to comply with the conditions of its probation, a court may resentence the corporation, extend the term of its probationary period, or impose additional probationary conditions. Special Assessments : Corporations are subject to a special assessment upon conviction at a rate of $400 for each felony count, $125 for class A misdemeanor count, $50 for each class B misdemeanor count, and $25 for each class C or infraction count. Restitution : Restitution is required when a defendant has been convicted of any of several offenses such as: (1) a crime of violence; (2) a crime against property including fraud; (3) sexual abuse; (4) child pornography; (5) copyright and trademark infringement; (6) production of methamphetamines; or (7) human trafficking. The court may order restitution when a corporation is convicted of a crime under title 18 of the U.S. Code for which mandatory restitution is not required or one of various Controlled Substance Act offenses. In the absence of other specific authority, the court may order restitution also as a condition of probation or pursuant to a plea bargain. Compliance Programs : The Guidelines' effective compliance and ethics program features are perhaps its most well-known corporate component. A corporation that lacks such a program is likely to have one imposed at sentencing or pursuant to a plea bargain. As noted earlier, a corporation that has one is likely to fare better during the investigation, bargaining, and sentencing phases of a criminal case. The Guidelines envision programs that promote an ethical and law-abiding culture within a corporation and that are calculated to identify and prevent criminal misconduct within the corporation. The elements of such a program consist of the following: (1) An established set of standards and procedures designed to detect and prevent criminal misconduct. (2) Senior management involvement in the program including its day to day operations. (3) Minimizing the operation participation of those previously ethically challenged. (4) Training corporate employees and agents. (5) Monitoring, auditing, and evaluating the program. (6) Encouraging and rewarding performance consistent with the program's goals; and disciplining inconsistent conduct. (7) Responding appropriately to the discovery of in-house criminal conduct. Community Service : The Guidelines provide that a corporation may be sentenced to perform community service related to the harm caused by its offense as a probationary condition as long as the corporation has skills, facilities, or knowledge particularly suited to task. Otherwise, it suggests that fines or other monetary sanctions may be more appropriate and that service unrelated to harm caused by the offense is not consistent with the Guideline. Other Remedial Orders : The court may impose other probationary conditions that address the harm caused or to be caused by the corporation's crime, including in cases of substantial anticipated future harm the creation of a trust fund. Forfeiture, the confiscation of property as a consequence of its relation to a criminal offense, is a creature of statute. Some forfeiture statutes are remedial, some punitive, and some serve both purposes. The Guidelines confirm that the property of a corporation is no less subject to confiscation than the property of an individual.

A corporation is criminally liable for the federal crimes its employees or agents commit in its interest. Corporate officers, employees, and agents are individually liable for the crimes they commit, for the crimes they conspire to commit, for the foreseeable crimes their coconspirators commit, for the crimes whose commission they aid and abet, and for the crimes whose perpetrators they assist after the fact. The decision whether to prosecute a corporation rests with the Justice Department. Internal guidelines identify the factors that are to be weighed: the strength of the case against the corporation; the extent and history of misconduct; the existence of a compliance program; the corporation's cooperation with the investigation; the collateral consequences; whether the corporation has made restitution or taken other remedial measures; and the alternatives to federal prosecution. As in the case of individual defendants, corporation prosecutions rarely result in a criminal trial. More often, the corporation pleads guilty or enters into a deferred or delayed prosecution agreement. During a criminal investigation and throughout the course of criminal proceedings, corporations enjoy many, but not all, of the constitutional rights implicated in the criminal investigation or prosecution of an individual. Corporations have no Fifth Amendment privilege against self-incrimination. On the other hand, the courts have recognized or have assumed that corporations have a First Amendment right to free speech; a Fourth Amendment protection against unreasonable searches and seizures; a Fifth Amendment right to due process and protection against double jeopardy; Sixth Amendment rights to counsel, jury trial, speedy trial, and to confront accusers, and to subpoena witnesses; and Eighth Amendment protection against excessive fines. Corporations cannot be jailed. Otherwise, corporations and individuals face many of the same consequences following conviction. The federal Sentencing Guidelines influence the sentencing consequences of conviction in many instances. Corporations can be fined. They can be placed on probation. They can be ordered to pay restitution. Their property can be confiscated. They can be barred from engaging in various types of commercial activity. The Guidelines speak to all of these. For example, the corporate fine Guidelines begin with the premise that a totally corrupt corporation should be fined out of existence, if the statutory maximum permits. A corporation operated for criminal purposes or by criminal means should be fined at a level sufficient to strip it of all of its assets. In other cases, the Guidelines recommend fines and sentencing features that reflect the nature and seriousness of the crime of conviction and the level of corporate culpability and remedial efforts. This is an abbreviated version of a longer CRS Report, without the footnotes or citations and attributions to authorities that appear in the longer report. The parent report is entitled CRS Report R43293, Corporate Criminal Liability: An Overview of Federal Law.

C ongress has an ongoing interest in regulating the immigration of professional, managerial, and skilled foreign workers to the United States. This workforce is seen by many as a catalyst of U.S. global economic competitiveness and is likewise considered a key element of the legislative options aimed at stimulating economic growth. The challenge central to the policy debate is facilitating the migration of professional, managerial, and skilled foreign workers without adversely affecting U.S. workers and U.S. students entering the labor market. This report opens with an overview of the policy issues. It follows with a summary of each of the various visa categories available for temporary professional, managerial, and skilled foreign workers as well as an analysis of the trends in the use of these various visas over the past two decades. The policy of authorizing foreign students to work in the United States for at least a year following graduation is discussed next. The labor market tests for employers hiring temporary foreign workers are also summarized. The rules regarding federal taxation of professional, managerial, and skilled foreign workers are explained. The report concludes with a discussion of the avenues for professional, managerial, and skilled foreign workers to become legal permanent residents (LPRs) in the United States. Temporary visas for professional, managerial, and skilled foreign workers have become an important gateway for high-skilled immigration to the United States. Over the past two decades, the number of visas issued annually for all temporary employment-based admission has more than doubled from just over 400,000 in FY1994 to over 1 million in FY2015. As Figure 1 shows, the total number of temporary employment-based visas issued in FY2007 and FY2008 surpassed 1 million and subsequently fell during the 2007-2009 recession. While the total visa numbers include some unskilled and low-skilled workers, the visas for managerial, skilled, and professional workers depicted in Figure 1 clearly dominate the trends. In FY2014 and FY2015, visas for managerial, skilled, and professional workers surpassed the prior peak year of FY2007 (885,232) as they reached 929,129 and 984,360, respectively. The data presented in Figure 1 understate the trends in professional, managerial, and skilled foreign workers because the State Department does not issue visas to nonimmigrants who change status within the United States. For example, a foreign national who is in the United States as a student may convert status to a temporary foreign worker nonimmigrant without going abroad to obtain a new visa. For comparison, the Department of Homeland Security Office of Immigration Statistics estimated that there were approximately 1.1 million temporary workers and long-term exchange residents living in the United States in January 2012; and the State Department reported that there were 937,366 visas issued to temporary employment-based workers and their families in FY2012. The foreign labor certification program in the U.S. Department of Labor (DOL) is responsible for ensuring that foreign workers do not displace or adversely affect the working conditions of U.S. workers. Under current law, DOL adjudicates labor certification applications (LCA) for permanent employment-based immigrants. Many of the foreign nationals entering the United States on a temporary basis for employment, however, are not subject to any labor market tests (i.e., demonstrating that there are not sufficient U.S. workers who are able, willing, qualified, and available), and as a result, their employers do not file LCAs with the DOL. There are several groups of temporary foreign employees, however, that are covered by labor market tests. DOL adjudicates the streamlined LCA known as labor attestations for certain temporary workers, as discussed more fully below . The admission of professional, managerial, and skilled foreign workers poses a complex set of policy questions as the United States competes internationally for the most talented workers in the world, while the nation also contends with historically high long-term unemployment rates and youth unemployment rates. Should the number of professional, managerial, and skilled foreign workers be numerically limited each year? If so, should some classes or types of workers be exempt from numerical limits? Should employers of professional, managerial, and skilled foreign workers be required to meet labor markets tests, such as making efforts to recruit U.S. workers and offering wages and benefits that are comparable to similarly employed U.S. workers? What, if any, labor protections and worker rights should be extended to professional, managerial, and skilled foreign workers to prevent abuse or exploitation of the worker? What, if any, guarantees should professional, managerial, and skilled foreign workers make to their employers to ensure the contractual obligations are met? Should professional, managerial, and skilled foreign workers have "visa portability" so they can change jobs? If so, to what visa categories and under what circumstances should visa portability apply? Should regulations governing the admission of professional, managerial, and skilled foreign workers be streamlined so that the rules are less time consuming and burdensome for employers? Should professional, managerial, and skilled foreign workers be permitted to have "dual intent," that is, to apply for lawful permanent resident (LPR) status while seeking or renewing temporary visas? If so, for what visa categories and under what circumstances should dual intent be permitted? In addition to these cross-cutting questions, policymakers and advocates have focused on two visa categories in particular: H-1B visas for professional specialty workers, and L visas for intra-company transferees. These two nonimmigrant visas epitomize the tensions between the global competition for talent and potential adverse effects on the U.S. workforce. H-1B visas are for temporary "professional specialty workers," an employment category closely associated with science, technology, engineering, and mathematics (STEM) fields, but not limited to them. The H-1B visa has been an important avenue for many U.S. businesses seeking to recruit high-skilled foreign workers, but the category has numerical limits. Applications for new H-1B workers have routinely exceeded such limits in recent years--in some years exceeding limits during the first week or even on the first day that applications are received. In addition to these concerns about whether employers have adequate access to H-1B workers, some Members of Congress have raised questions about whether H-1B workers may be placing downward pressure on wages and benefits as well as discouraging or displacing U.S. students in STEM fields. Over the years, the U.S. Government Accountability Office (GAO) has issued reports that recommended more controls to protect workers, to prevent abuses, and to streamline services in the issuing of H-1B visas. GAO has observed that the U.S. Department of Labor (DOL) has limited authority to question information on the labor attestation form and to initiate enforcement activities. In 2011, GAO identified several weaknesses in the H-1B program's ability to protect workers: (1) oversight that is fragmented between four agencies and restricted by law; (2) lack of legal authority to hold employers accountable to program requirements when they obtain H-1B workers through a staffing company; and (3) expansions that have increased the pool of H-1B workers beyond the cap and lowered the bar for eligibility. A 2008 internal Department of Homeland Security (DHS) investigation of H-1B visa adjudications found a 13.4% fraud rate as well as a 7.3% technical violation rate. Violations reportedly ranged from document fraud to deliberate misstatements regarding job locations, wages paid, and duties performed. The investigation also discovered that some petitioning employers shifted the burden of paying various filing fees to foreign workers. A 2010 DHS investigation found a 14% "not verified" rate, which U.S. Citizenship and Immigration Services (USCIS) officials cited to suggest a reduced level of fraud in the H-1B program. It was unclear, however, how the 14% "not verified" rate compared with 13.4% fraud rate and the 7.3% technical violation rate. Media coverage of the links between H-1B workers and outsourced jobs has sparked outrage, and a bipartisan group of Members has called for further investigations and legislative action. More specifically, the major U.S. utility company Southern California Edison announced plans in early 2015 to lay off 400 U.S. technology workers and to outsource the technology-related work to companies in India. The India-based companies reportedly proposed to use H-1B workers to perform technology-related work that would remain in California. More recently, the New York Times published a series that exposed companies such as Disney and Toys 'R' Us requiring their U.S. workers to train H-1B workers before their positions were outsourced overseas. The L-1 intra-company transferee visa was established for companies that have offices abroad to transfer key personnel freely within the organization. It is considered a visa category essential to retaining and expanding international businesses in the United States. Some, however, have raised concerns that intra-company transferees on the L-1 visa may displace U.S. workers who had been employed in those positions for these firms in the United States. Others express concern that the L-1 visa has become a substitute for the H-1B visa, noting that L-1 employees are often comparable in skills and occupations to H-1B workers, yet lack the labor market protections the law sets for hiring H-1B workers. These concerns have been raised, in particular, with respect to certain outsourcing and information technology firms that employ L-1 workers as subcontractors within the United States. A related concern is that an unchecked use of L-1 visas will foster the transfer of STEM and other high-skilled professional jobs overseas, as managers and specialists gain experience in the United States before they transfer the operations abroad. After investigating the L-1 visa, the Department of Homeland Security Inspector General offered this assessment: "That so many foreign workers seem to qualify as possessing specialized knowledge appears to have led to the displacement of American workers, and to what is sometimes called the 'body shop' problem." Legislation to address these concerns is frequently linked with H-1B reform. On the other hand, concern has been expressed about the increase in denials of L-1 visas as well as the increase in requests for additional evidence in order to adjudicate the L petition. Stuart Anderson of the National Foundation for American Policy analyzed the subset of L-1 petitions for employees with specialized knowledge (L-1B). Over a 10-year period from FY2004 to FY2013, denials of L-1B petitions rose from 10% in FY2004 to 34% in FY2013. The same study reported that requests for additional evidence went from 2% of L-1B petitions to 46% of L-1B petitions. Immigration attorney and former chief counsel at USCIS Lynden Melmed is quoted as saying, "(I)t is very difficult for companies to make business decisions when there is so much uncertainty in the L-1 visa process. A company is going to be unwilling to invest in a manufacturing facility in the U.S. if it does not know whether it can bring its own employees into the country to ensure its success." It is difficult to assess the merits of these concerns without a deeper understanding of the temporary visas for professional, managerial, and skilled foreign workers. The following section of this report delves into the purposes of the various visas, the statutory rules that govern admission under these visas, and the trends in usage of these visas. When it was enacted in 1952, the Immigration and Nationality Act (INA) authorized visas for foreign nationals who would perform needed services because of their high educational attainment, technical training, specialized experience, or exceptional ability. Today, there are several temporary visa categories that enable employment-based temporary admissions for highly skilled foreign workers. These visa categories are commonly referred to by the letter and numeral that denote their subsection in the INA. They perform work that ranges from skilled labor to management and professional positions to jobs requiring extraordinary ability in the sciences, arts, education, business, or athletics. The INA makes H-1B nonimmigrant visas available for foreign workers in "specialty occupations," which the regulations define as requiring theoretical and practical application of a body of highly specialized knowledge in a field of human endeavor including, but not limited to, architecture, engineering, mathematics, physical sciences, social sciences, medicine and health, education, law, accounting, business specialties, theology, and the arts, and requiring the attainment of a bachelor's degree or its equivalent as a minimum. Current law generally limits annual H-1B admissions to 65,000, but most H-1B workers are exempted from the limits because they are returning workers or they work for universities and nonprofit research facilities that are exempt from the cap. Prospective employers of H-1B workers must submit a labor attestation to the Secretary of Labor before they can file petitions with USCIS to bring in foreign workers. The H-1B labor attestation, a three-page application form, is a statement of intent rather than a documentation of actions taken. In the labor attestation for an H-1B worker, the employer must attest that the firm will pay the nonimmigrant the greater of the actual wages paid to other employees in the same job or the prevailing wages for that occupation, that the firm will provide working conditions for the nonimmigrant that do not cause the working conditions of the other employees to be adversely affected, and that there is no applicable strike or lockout. The firm must provide a copy of the labor attestation to representatives of the bargaining unit or--if there is no bargaining representative--post the labor attestation in conspicuous locations at the work site. The law requires that employers defined as H-1B dependent (generally firms with at least 15% of the workforce who are H-1B workers) meet additional labor market tests. These H-1B dependent employers must also attest that they tried to recruit U.S. workers and that they have not displaced U.S. workers in similar occupations within 90 days prior to or after the hiring of H-1B workers. Additionally, the H-1B dependent employers must offer the H-1B workers compensation packages (not just wages) that are comparable to U.S. workers. All prospective H-1B nonimmigrants must demonstrate to USCIS that they have the requisite education and work experience for the posted positions. After DOL has approved the labor attestation, USCIS processes the petition for the H-1B nonimmigrant (assuming other immigration requirements are satisfied) for periods up to three years. A foreign national can stay a maximum of six years on an H-1B visa. The Immigration Act of 1990 set an annual cap of 65,000 H-1B workers, a level not reached in the early years of the visa category. As the information technology industry began turning to H-1B visas for temporary foreign workers, the limits of the cap were reached. Although Congress enacted legislation in 1998 to increase the number of H-1B visas, that annual ceiling of 115,000 visas was reached months before FY1999 and FY2000 ended. Many in the business community, notably in the information technology area, once more urged that the ceiling be raised. In 2000, Congress enacted legislation to raise the annual ceiling to 195,000 for three years and to permanently exempt those H-1B workers who are renewing their visas or who work for universities and nonprofit research facilities from the 65,000 cap. During this temporary period, the higher cap of 195,000 was not met because an increasing number of H-1B workers were now exempt from the cap. A subsequent provision also annually exempts up to 20,000 aliens holding a master's or higher degree from the numerical limit on H-1B visas. In FY2015, USCIS approved 275,317 H-1B professional specialty worker petitions, an increase from a 21 st century low point of 192,990 in FY2010 following the 2007-2009 recession. The number of petitions approved in FY2015 also represents a decrease from the previous year, FY2014, where USCIS approved 315,857 petitions. The previous high point was 331,206 H-1B professional specialty worker petitions approved in FY2001. Although current law sets a numerical limit of 65,000 H-1B workers each year (plus 20,000 with masters degrees), only initial grants are counted under the cap. As Figure 2 displays, over the past decade more H-1B workers were approved outside of the numerical limits than under the cap. Not all H-1B workers with approved petitions actually use the visa. Over the years, a noteworthy portion of H-1B beneficiaries have worked in STEM occupations. In FY2014, the most recent year for which detailed data on H-1B beneficiaries (i.e., workers renewing their visas as well as newly arriving workers) are available, 203,425 H-1B workers were employed in computer-related occupations, and they made up 65% of all H-1B beneficiaries that year. Of all H-1B beneficiaries in FY2014, 45% had a bachelor's degree, 47% had a master's or professional degree, and almost 8% had a doctorate degree. The median salary reported for all H-1B beneficiaries in FY2014 was $75,000. There are two nonimmigrant visa categories similar to H-1B visas that are designated for temporary professional workers from specific countries. These visas are based upon specific trade agreements foreign nations have signed with the United States. Canadian and Mexican temporary professional workers may enter according to terms set by the North American Free Trade Agreement (NAFTA) on TN visas. The E-3 treaty professional visa is a temporary work visa limited to citizens of Australia. Occupationally, they mirror the H-1B visa in that the foreign worker on an E-3 visa or a TN visa must be employed in a specialty occupation. Employers of E-3 workers are required to file a labor attestation. The TN visa is valid for one year and is renewable. The broadest category for cultural exchange is the J visa, which includes professors and research scholars, students, foreign medical graduates, teachers, resort workers, camp counselors, and au pairs who are participating in an approved exchange visitor program. The U.S. Department of State's Bureau of Educational and Cultural Affairs (BECA) is responsible for approving the cultural exchange programs. J visa holders are admitted for the period of the program. Most foreign nationals on J-1 visas are permitted to work as part of their cultural exchange program participation. The J cultural exchange visas have expanded over time from visas issued for educational, research, or scholarship purposes to visas issued for programs engaged in more mundane tasks, such as child care, resort work, or camp counseling. Today, the J visas may be issued to over a dozen subcategories of exchange visitors, many of whom work in the United States. Currently, foreign medical graduates may enter the United States on J-1 visas in order to receive graduate medical education and training. As is the case with most foreign nationals on J-1 visas, foreign medical graduates must return to their home countries after completing their education or training for at least two years before they can apply for certain other nonimmigrant visas or LPR status, unless they are granted a waiver of the foreign residency requirement. States are permitted to sponsor up to 30 waivers per state, per year on behalf of FMGs under a temporary program, colloquially known as the Conrad 30 Program because it was originally sponsored by former Senator Kent Conrad. The objective of the Conrad 30 Program is to encourage immigration of foreign physicians to medically underserved communities. GAO has reported that it has been a major means of providing physicians to practice in underserved areas of the United States. The Q visa is used by a smaller employment-oriented cultural exchange program, and its stated purpose is to provide practical training and employment as well as share history, culture, and traditions. U.S. Citizenship and Immigration Services (USCIS) approves the Q cultural exchange programs, and only employers are allowed to petition for Q nonimmigrants. USCIS encourages the prospective employer to submit evidence illustrating that the program activities take place in a public setting where the sharing of culture can be achieved through direct interaction with the American public. Employers are expected to offer the Q cultural exchange worker wages and working conditions comparable to other workers in the locale that are similarly employed. Intra-company transferees who are executive, managerial, or have specialized knowledge and are employed with an international firm or corporation are admitted on the L-1 visas. The prospective L-1 nonimmigrant must demonstrate that he or she meets the qualifications for the particular job as well as the visa category. The foreign national must have been employed by the firm for at least six months in the preceding three years in the capacity for which the transfer is sought. The foreign national must be employed in an executive capacity, a managerial capacity, or have specialized knowledge of the firm's product to be eligible for the L-1 visa. Those with specialized knowledge are often labeled L-1B. The INA does not require firms who wish to bring L-1 intra-company transfers into the United States to demonstrate that U.S. workers will not be adversely affected in order to obtain a visa for the transferring employee. The L-1 visa is valid for five years and is renewable for a total of seven years. Aliens who are treaty traders enter on E-1 visas, whereas those who are treaty investors enter on E-2 visas. An E-1 treaty trader visa allows a foreign national to enter the United States for the purpose of conducting "substantial trade" between the United States and the country of which the person is a citizen. An E-2 treaty investor can be any person who comes to the United States to develop and direct the operations of an enterprise in which he or she has invested, or is in the process of investing a "substantial amount of capital." Both these E-class visas require that a treaty exist between the United States and the principal foreign national's country of citizenship. Both the E-1 and E-2 visas are valid for two years and are renewable in two-year intervals. Persons with extraordinary ability in the sciences, the arts, education, business, or athletics can be admitted on O visas. Generally, the O visa is reserved for the highest level of accomplishment and covers a fairly broad set of occupations and endeavors, including athletics and entertainment. Regulations implementing the O visa define extraordinary ability in the field of science, education, business, or athletics as a level of expertise indicating that the person is one of a small percentage that has arisen to the very top of the field of endeavor. The O visa is valid for up to three years and is renewable for one year. The P visa has a somewhat lower standard of achievement than the O visa, and it is restricted to a narrower band of occupations and endeavors. The P visa is used by an alien who performs as an artist, athlete, or entertainer (individually or as part of a group or team) at an internationally recognized level of performance and who seeks to enter the United States temporarily and solely for the purpose of performing in that capacity. The law allows individual athletes to stay in intervals up to five years at a time, up to 10 years in total. Foreign nationals working in religious vocations enter on R visas. The regulations define religious occupation as "an activity which relates to a traditional religious function." USCIS further defined "religious denomination" to clarify that it applies to a religious group or community of believers governed or administered under some form of common ecclesiastical government. Under the regulations, the denomination must share a common creed or statement of faith, some form of worship, a formal or informal code of doctrine and discipline, religious services and ceremonies, established places of religious worship, religious congregations, or comparable indicia of a bona fide religious denomination. The initial length of admission on an R visa is for a period up to 30 months. A more detailed presentation of visas issued to professional, managerial, and skilled foreign workers by visa category for FY2015 is presented in Figure 3 . As some, but not all, visa categories differentiate between the principal or qualifying foreign national and derivative immediate family that are permitted to accompany the foreign national, Figure 3 omits the derivative family members when possible. The total number of professional, managerial, and skilled foreign worker visas issued abroad to principals was 707,781in FY2015. Although the cultural exchange workers are the largest single category of temporary foreign workers (47%), it is important to note that about one-third of the J-1 visas are issued to persons engaged in Summer Work Travel (SWT). The State Department characterizes SWT as providing "foreign students with an opportunity to live and work in the United States during their summer vacation from college or university to experience and to be exposed to the people and way of life in the United States." Many compare this use of the J-1 visas for SWT to the H-2 visas for seasonal and shortage guest workers. Similarly, the Q visa is often used by the hospitality and entertainment industry (e.g., Disney Parks). Q visas comprised less than 1% of all cultural exchange visas issued in FY2015. Over the past two decades, the numbers of visas issued to each of the categories of professional, managerial, and skilled foreign worker have increased. The relative portions, however, have not changed substantially, as Figure 4 makes clear. The professional workers (H-1Bs and TNs), the cultural exchange workers (J-1), and the intra-company transferees (L-1) have driven most of the growth over the past two decades. There has also been a slow but steady increase in foreign workers deemed outstanding and extraordinary (O and P) over this same period. Only the religious worker visa category has remained rather flat. Although foreign students on F visas are generally barred from off-campus employment, some F-1 foreign students are permitted to participate in employment known as Optional Practical Training (OPT) after completing their undergraduate or graduate studies. OPT is temporary employment that is directly related to an F-1 student's major area of study. Generally, an F-1 foreign student may work up to 12 months in OPT status. In 2008, the Bush Administration expanded the OPT work period to 29 months for F-1 students in STEM fields. To qualify for the 17-month extension, F-1 students must have received STEM degrees included on the STEM Designated Degree Program List, be employed by employers enrolled in E-Verify, and have received an initial grant of post-completion OPT related to such a degree (i.e., already approved for 12 months in OPT). President Barack Obama's Immigration Accountability Executive Action of November 20, 2014, included a "High Skilled Memorandum" that directed USCIS and Immigration and Customs Enforcement (ICE) to develop regulations to expand the number of degree programs eligible for OPT, and to extend the time period and use of OPT for STEM students and graduates. The new policy would also require the OPT program to have stronger ties to degree-granting institutions to ensure that a student's OPT furthers his or her course of study in the United States. In addition, the "High Skilled Memorandum" stated that the new policy would have to be consistent with U.S. worker protections. DHS proposed new rules in October 2015 that, among other things, would extend the 17-month extension for STEM graduates to a 24-month extension. According to USCIS, the number of F-1 visa holders who are engaged in OPT has risen substantially, from 28,497 in FY2008 to 136,617 in FY2014 ( Figure 5 ). OPT workers are now approaching the H-1B workers in terms of number of visas issued annually. In 2014, GAO released a report noting the potential for fraud and abuse of the OPT status. GAO concluded that DHS' Immigration and Customs Enforcement was unable to "fully ensure foreign students working under optional practical training are maintaining their legal status in the United States." Foreign nationals in the United States are classified as resident or nonresident aliens for federal income tax purposes. Resident aliens are generally subject to the same income tax obligations as citizens of the United States. Temporary foreign workers may also be considered resident aliens if they satisfy a "substantial presence" test based upon the number of days they have been in the United States. If the foreign national is on an F, J, M, or Q visa working as a teacher, student, or trainee, the days working in that capacity do not count toward substantial presence. Professional, managerial, and skilled foreign workers as a category are generally not exempt from the individual mandate to have health care coverage under the Affordable Care Act. In terms of the Federal Insurance Contributions Act (FICA), most noncitizens employed in the United States are subject to Social Security and Medicare taxes on wages in the same manner as U.S. citizens. However, the Internal Revenue Code specifically excludes the employment of foreign temporary agricultural workers, foreign students on F and M visas, and cultural exchange visitors on J and Q visas from the definition of employment for the purposes of FICA. Regulations implementing current FICA law for employment of students provide that when an individual is working for a college or university and when the primary status of the individual is as a student, rather than as an employee, then any work performed is excluded from employment for purposes of FICA. The regulations clarify that full-time employees are not "students" for purposes of the FICA exception. "If an employee is not a full-time employee, then whether the employee qualifies as a student depends on all the relevant facts and circumstances. An individual is a student if education, not employment, is the predominant aspect of the employee's relationship with the employer." For example, medical residents working full-time are not considered students by the IRS and are subject to FICA payroll taxes. Although most students working off-campus are typically engaged in work that would be covered by FICA taxes, the regulations expressly exempt foreign students and exchange visitors from FICA, if DHS has given them work authorization. In terms of foreign students and cultural exchange visitors, current law on the definition of employment exempts the following for the purposes of FICA: Service which is performed by a nonresident alien individual for the period he is temporarily present in the United States as a nonimmigrant under subparagraph (F), (J), (M), or (Q) of section 101(a)(15) of the Immigration and Nationality Act, as amended, and which is performed to carry out the purpose specified in subparagraph (F), (J), (M), or (Q) as the case may be. This blanket exemption for foreign nationals on F and J visas (as well as M and Q visas) is based upon nonimmigrant status. It does not differentiate the type of employment or relationship to the employer. To continue the example of medical residents, a foreign national who is on a J visa as a medical resident working full-time is not subject to FICA payroll taxes. If a foreign national on an F-1, J-1, M-1, or Q visa performs work that is not connected to the purpose for which he or she was admitted to the United States, the employment is covered by Social Security, unless otherwise specifically excluded by law. According to the IRS, the following types of employment of F-1 and J-1 workers are exempt from FICA taxes: On-campus student employment up to 20 hours a week (40 hours during summer vacations). Off-campus student employment authorized by USCIS. OPT student employment on or off campus. Employment as professor, teacher, or researcher. Employment as a physician, au pair, or summer camp worker. Totalization Agreements that the United States has signed with selected foreign governments to avoid double taxation of income for social security purposes also bear on whether the temporary foreign workers are subject to FICA. Temporary professional visas have become an important gateway for high-skilled immigration to the United States. About half of all employment-based lawful permanent residents (LPRs) have been working in the United States on temporary visas. More specifically, 46% of the foreign nationals who became employment-based LPRs in the United States during the decade of 2000-2009 had formerly held H-1B visas. Over this same time period, almost half (48.6%) of employment-based principals who were deemed extraordinary/priority workers had been L intracompany transferees. More recently, the OPT status may provide the link for foreign students to become employment-based LPRs. Many anecdotal accounts tell of foreign students who are hired by U.S. firms as they are completing their programs. Employers may opt to hire them as OPT to extend their F-1 visas. According to DHS: "This extension of the OPT period for STEM degree holders gives U.S. employers two chances to recruit these highly desirable graduates through the H-1B process, as the extension is long enough to allow for H-1B petitions to be filed in two successive fiscal years." If the temporary foreign workers meet expectations, the employers may also petition for them to become LPRs through one of the employment-based immigration categories. Over 90% of employment-based LPRs are adjusting from a temporary visa category to LPR status within the United States, rather than newly arriving from abroad. Because the INA requires most foreign nationals seeking to qualify for a nonimmigrant visa to demonstrate that they are not coming to reside permanently, these adjustment of status statistics prompt further explanation on the exceptions noted in the law. Temporary workers who are H-1B or L visa holders are permitted to petition for a LPR visa at the same time that they file for an H-1B or L visa, a policy exception known as dual-intent. (i.e., generally, a foreign national applying for a temporary visa cannot also be seeking an LPR visa). Specifically, SS214(b) of the INA generally presumes that all aliens seeking admission to the United States are coming to live permanently; as a result, most foreign nationals seeking to qualify for a nonimmigrant visa must demonstrate that they are not coming to reside permanently. Currently, the INA exempts foreign nationals seeking H-1 professional visas and L intra-company transferee visas (as well as V accompanying family members) from the requirement that they prove they are not coming to live permanently. The metaphor for U.S. policy on economic migration is a post at the border with two signs: one reads "Help Wanted," and the other reads "Keep Out." This tension between competing interests on foreign workers has long characterized American immigration policy. Balancing these priorities on the issues of temporary visas for professional, managerial, and skilled foreign workers is no small feat, and is further complicated by a lack of consensus on the broader policy debate over comprehensive immigration reform.

Temporary visas for professional, managerial, and skilled foreign workers have become an important gateway for high-skilled immigration to the United States. Over the past two decades, the number of visas issued for temporary employment-based admission has more than doubled from just over 400,000 in FY1994 to over 1 million in FY2015. While these visa numbers include some unskilled and low-skilled workers as well as accompanying family members, the visas for managerial, skilled, and professional workers dominate the trends. Since 1952, the Immigration and Nationality Act (INA) has authorized visas for foreign nationals who would perform needed services because of their high educational attainment, technical training, specialized experience, or exceptional ability. Today, there are several temporary visa categories that enable employment-based temporary admissions for highly skilled foreign workers. These visa categories are commonly referred to by the letter and numeral that denote their subsection in the INA. They perform work that ranges from skilled labor to management and professional positions to jobs requiring extraordinary ability in the sciences, arts, education, business, or athletics. Policymakers and advocates have focused on two visa categories in particular: H-1B visas for professional specialty workers, and L visas for intra-company transferees. These two nonimmigrant visas epitomize the tensions between the global competition for talent and potential adverse effects on the U.S. workforce. The employers of H-1B workers are the only ones required to meet labor market tests in order to hire professional, managerial, and skilled foreign workers. Although foreign students on F visas are generally barred from off-campus employment, some F-1 foreign students are permitted to participate in employment known as Optional Practical Training (OPT) after completing their undergraduate or graduate studies. OPT is temporary employment that is directly related to an F-1 student's major area of study. Generally, an F-1 foreign student may work up to 12 months in OPT status. In 2008, the Bush Administration added a 17-month extension to OPT for F-1 students in STEM fields, and the Obama Administration recently proposed a 24-month extension for F-1 students in STEM fields. Congress has an ongoing interest in regulating the immigration of professional, managerial, and skilled foreign workers to the United States. This workforce is seen by many as a catalyst of U.S. global economic competitiveness and is likewise considered a key element of the legislative options aimed at stimulating economic growth. The challenge central to the policy debate is facilitating the migration of professional, managerial, and skilled foreign workers without putting downward pressures on U.S. workers and U.S. students entering the labor market.

This report is designed to help the 110 th Congress better understand the characteristics and importance of measurement of counter-terrorism activities, the dynamics of the phenomenon to be measured, i.e. terrorism, and what would generally be required from any entities--government or otherwise--tasked with establishing and evaluating measures of effectiveness. It is not intended to define counter-terrorism activities, nor to create a definitive, in-depth methodology for measuring progress against terrorism. Rather, it is designed to provide added tools and insights to support Congress in its efforts to coordinate, fund, and oversee the nation's anti-terrorism activities. The Government Performance and Results Act (GPRA) requires agencies to set goals and objectives for their performance, and to measure progress against these goals and objectives. Under the law, anti-terror efforts are not exempt from these requirements, without which the objective evaluation of progress to the full satisfaction of Congress might be impeded. Rising costs of anti-terrorism efforts have become an increasing problem. The vast land area of the United States and widespread U.S. interests abroad are impossible to protect entirely. Billions of dollars have been spent to develop anti-terror technologies, establish crisis management training and enhance security staffing throughout the country. Whether these expenditures are cost-effective, or whether the money would be better spent, for instance, building secular schools in Islamic countries or promoting public relations efforts aimed at young Muslims, remains an important policy question. Developing robust measurement criteria might assist government officials in answering such questions. It is unclear just how much the United States spends overseas annually in non-military areas to combat terrorism, but the amounts are in the billions of dollars. For FY2004, the Government Accountability Office (GAO) put the figure at $11 billion. At home, dollar amounts spent on terrorism-related security by the 50 states are elusive as well, but FY2006 appropriations for the Department of Homeland Security topped $30 billion ($30.8 billion). Arguably, existing legislation requires government agencies to be held accountable for the cost-effectiveness of these mammoth expenditures on combating terrorism. Demonstrable, measurable, effective progress against terrorism is the desired goal. Among the various U.S. government agencies involved in anti-terrorism efforts, there is currently no common set of criteria for measuring success. Although over four years have elapsed since the tragic events of September 11, 2001, many agencies are still attempting to establish and define precise criteria and standards, without which they cannot measure organizational performance. Uncertainty with respect to both strategies and measurements makes it difficult to describe progress accurately and to demonstrate progress to the public or U.S. allies. Different types of terrorist threats may carry different risks and potential impacts, and strategies may need to adapt accordingly. For instance, different strategies may be applicable to terrorism rooted in political or economic vs. cultural or theocratic origins. Such differences in threats and our response strategies make measurement of progress more difficult. For the greatest success, the war on terrorism, like the war on drugs, must arguably be conducted and measured in a multi-faceted manner on many fronts, with sufficient resources allocated to each strategic element. It is usually not possible to achieve this approach due to funding limitations, and the result is vulnerabilities in certain areas, where acknowledgment of lack of progress may be politically unpopular. Of concern to some is that efforts to gauge progress may be compromised should measurement criteria selectively target areas of apparent relative progress, such as increased airport security, while other areas, such as port security, may remain under-addressed. Another area of concern is that anti-terrorist actions might be undertaken for a wide range of reasons without being clearly linked to previously defined anti-terror goals; in such circumstances, caution would likely be warranted before characterizing results as progress. A common misconception is that by increasing expenditures the nation is necessarily making good progress. As a practical matter, the nation cannot secure everything, everywhere. Terrorist operations are relatively inexpensive to organize and carry out, especially in comparison to the damage they may inflict, or the cost of trying to prevent them from happening. Consequently, spending more money may not necessarily increase security proportionally. Moreover, some suggest that the United States is bleeding itself dry economically, like the Soviet Union did in its attempts to match western military spending during the cold war. Some contend that the biggest threat to democracy from terrorism is not destruction of property and life, but rather an inexorable erosion of civil liberties worldwide. Other concerns are loss of international unity due to policy differences, loss of opportunities due to budget and policy constraints, and reduction of U.S. stature and public relations image abroad. These and many other factors form a mosaic of measurements that highlight the complexities of analyzing progress. How one perceives and measures progress is central to formulating and implementing anti-terror strategy. The perception of progress has a major impact on establishing priorities and allocating resources. The parameters used to measure progress can also set the framework for measurement of failures. To better define the parameters of success, it is important to determine what both the terrorists, and those who fight them, see as their goals and priorities. Critical to the measurement process is the realization that measurements are inextricably linked to strategies. Positive progress is possible using diverse strategies, which may employ very different tactics. For example, some nations take a hard line against radical Islamists, including targeted assassination, while other nations appear to have a more laissez-faire --if not conciliatory/accommodating--approach. Both strategies can claim progress, using different measurements. An important consideration in formulating measurable strategies is reduction of uncertainty through clear enunciation of policy. In a statement issued by President Bush on September 28, 2005 titled Fighting a Global War on Terror , he emphasized four core elements of America's strategy for victory in the war on terror: (1) fighting the enemy abroad; (2) denying terrorists state support and sanctuary; (3) denying terrorists access to weapons of mass destruction; and (4) spreading democracy. These elements generally echo Administration anti-terror strategy as set forth in its February 14, 2003, National Strategy for Combating Terrorism . In the wake of 9/11, the Administration has pointed to the killing or capture of more than 2/3 of al Qaeda's top leadership and seizure of over $200 million in terrorist financing as examples of progress against terrorism. More recently, progress milestones cited by President Bush in his September 28, 2005 statement included (1) removal of brutal regimes in Afghanistan and Iraq that harbored terrorists; (2) moving forward in the "march" of democracy worldwide, noting Lebanon; (3) shutting down a major weapons of mass destruction [WMD] black market network originating in Pakistan, and Libya's rejoining a community of nations; and (4) capturing a number of key terrorists in Pakistan and Iraq, as well as capturing and killing hundreds of insurgents in Iraq. Disruption of al Qaeda terrorist plots and efforts to infiltrate the United States were subsequently cited as an additional indication of success by the President in his discussion of the war on terror at the National Endowment for Democracy on October 6, 2005. Though some $200 million is said to have been have been confiscated, it is not clear how much damage has been done to the terrorist's ability to raise or transfer additional funds. Moreover, if one terminates 2/3 of the senior leadership of a particular terrorist organization, the ranks of the organization may grow and decentralize, similar to the impact of attacks on drug cartels, evolving into a more resilient adversary. Another key issue is how one measures the impact of unintended consequences--or side effects and by-products--and other results, such as diverting scarce resources from one policy area to another, increasing spending and possibly adding to the budget deficit, or eroding civil liberties. These types of issues were often not addressed in the Patterns of Global Terrorism reports of previous years. However, in contrast, the successor to Patterns , titled Country Reports on Terrorism , now emphasizes in-depth, comprehensive analysis. The phenomenon of terrorism can be seen as comprising human elements (supporters and hard core terrorists) and ideological elements. To the degree that terrorism is viewed as a process, the phenomenon is similar to a pipeline or factory assembly line with key stations along the way. The process includes ideological outreach, acquisition of funding and support, recruitment, organization, indoctrination, training, planning, targeting, attack, exploitation of results, financial rewards and other factors which lead to production of terrorist acts. Any such proposed anti-terrorism model would be adapted for specific terrorist groups, since such groups may operate differently. A challenge facing those who seek to measure progress against terrorism is to identify critical, outcome-determining elements and assess how well they have been mitigated. Disrupting the process of terrorism as early as possible is vital, since it can eventually become an economic engine in its own right, with increasing numbers of individuals and businesses deriving financial benefits and developing vested interests. The terrorists' initial search for ideological or financial supporters and physical recruits comes at the beginning of the process. Important here is the level of state support or opposition to such activities. At a subsequent phase, one might look at the organization or network and seek to measure its effectiveness and resiliency. In addition to measuring the terrorism process itself, structural and environmental factors also require evaluation. Is the dependence on certain factors that terrorists or anti-terrorists can exploit as vulnerabilities increasing or decreasing? How seamlessly do terrorist organizations and networks interact? How seamlessly do new government anti-terrorist organizational structures and networks interact? Is the international operating environment becoming more or less inviting or restrictive for terrorists or for those combating them? Is it easier or harder today for terrorists to inflict the damage they seek to do? Also important is the post-attack/recovery period. Since not all targets can be protected at all times, some will likely be hit. Hence the effectiveness of post-attack/incident recovery is a significant factor in measuring the success or failure of terrorist operations. Is the ability of the United States to recover from bombings or similar attacks stronger today than it was several years ago, or not? Increasingly, as terrorist groups seek to cause economic damage, the ability of governments to recover rapidly economically in the aftermath of terrorist attacks becomes an important indicator of progress in combating the phenomenon of terrorism. Success at each stage of the process can be measured in various ways, including relatively continuous metrics such as the number of recruits, the dollars expended, the economic value of targets, the number of casualties inflicted, etc. Similar assessment categories can be developed for other pertinent factors, such as societal or environmental aspects of terrorism. Related factors may sometimes be grouped for convenience of discussion or to render them more amenable to certain mathematical treatment. Measurements may be compared at various points in time or otherwise analyzed inferentially. It is natural to assume that decreases in terrorist activity, or even a slowing rate of increase, reflect progress in anti-terror efforts. Arguably, however, this type of measurement may underestimate the varied nature of terrorist actions. The often asymmetric, nonlinear nature of terrorist operations, frequently characterized by abrupt changes, increases the deadliness of the threat and necessitates measurements of progress that more accurately reflect this additional danger. It is important to recognize that terrorist activities (and concomitant anti-terrorist efforts) evolve as a set of actions, incidents, and other manifestations evidenced by quantum-like jumps and changes in state. This may make it more difficult to measure success, or failure, but this view is compatible with the complexities in this area. For instance, once suicide bombing starts, it presents a qualitatively different environment than before and changes the nature of the threat. Likewise, small bombings may be on a continuum, but the attacks of 9/11 were a qualitatively different phenomenon. Once terrorism escalates to a new plateau, it becomes increasingly dangerous, like the mutation of a virus to a more virulent strain. As terrorism mutates, so must an effective response designed to counter it. Once terrorism has escalated to a higher level, a previous response may be less effective. Hence, terrorism requires a pro-active and quickly malleable policy of prevention and mitigation. One concern is that the phenomenon of terrorism, if not effectively challenged and disrupted, may at some point jump to become a regional or global pandemic of violence as an accepted modus operandi for social change. Yet another concern is that terrorism will become the ballot box for the dispossessed, if the gap between the "haves and have nots" continues to widen. Arguably therefore, it is important not only to measure where terrorism is, but also how close terrorists are to the next quantum jump. The potential quantum jump currently of greatest concern to many would be to WMD (chemical, biological or radiological/nuclear). In this view, a focal point of measurement would be how close the terrorists are to this next level, what it would take for them to achieve it, and how well the nation is preventing them from getting there. What are possible indicators that a quantum jump is imminent? Some of the possible indicators, experts look to, or might look to, as an indication that a terrorist group is about to move to another level include: Intelligence . Ability of terrorists to ascertain specific knowledge critical to exploiting the nation's vulnerabilities or to thwarting anti-terror operations. Technology . Closeness of access to a critical quantum change-producing technology or equipment incorporating such technology. Impact on Society . Both material and psychological impact beyond a critical threshold, such as disruption of the banking system, or establishment of such pervasive fear that key civil liberties or moral principles underlying the national identity are set aside by the government in the interests of security. Targets and Their Protection . Shifts from individual targets to mass casualties; shifts from focus on high-visibility targets to coordinated attacks against multiple softer targets, yielding a domino effect with mega-impact (including mega-impact on morale); generally, dramatic shifts in the scale and brutality of attacks. Alliances . The emergence of new synergistic terrorist alliances and the willingness/ability of terrorist organizations to form alliances with other terrorist and criminal networks, and/or rogue states. This synergy could escalate terrorist operations in a nonlinear manner. Disruption . Large-impact, unexpected attacks which could force anti-terror operations into solely defensive posture. Amount of Unproductive Energy Expended . The degree to which terrorists force governments to expend a critical limit of funds or resources beyond which certain anti-terror efforts become unsustainable and must be curtailed. Sophistication of Effort . Hijacking an airplane to hold passengers hostage vs. doing so to use it as a missile; suicide bombings by lone individuals vs. suicide bombings by trucks with high explosives; hijacking of web pages vs. widespread disruption of communications networks using sophisticated computer viruses; use of conventional explosives vs. "dirty" bombs. Morale/Momentum . Ordinary recruitment of a small number of disenchanted fanatics vs. the critical mass of group dynamics needed to foment and propagate terrorism as a self-sustaining process. On the other hand, anti-terror efforts which dilute the process below a critical threshold may result in the eventual dissolution of the process. Progress may be defined differently by the terrorists and those who oppose them. Hence both can claim progress, and both can be correct in their assessments. How can this be reconciled? How can measurements of progress be established which are not politicized or biased? In this regard, one must be cautious that success is not defined retrospectively, with goals reformulated after the fact to correspond with the known outcomes. Arguably, measurements of progress have greater validity if strategies are established before, and not after, taking action. In a search for meaningful measurement criteria, the academic, engineering, scientific and actuarial communities may have much to offer government policymakers. Extensive mathematical tools exist to help define and validate proposed measurement systems, and indeed one might employ a variety of such systems used by different groups. As long as measurements are clearly defined and linked to goals and objectives, these differences need not be divisive. The conduct of a survey of data on terrorism is an option. That is, a survey of what data on terrorism--especially data bases--currently exist, what categories and details are found within that data, and what the data can reasonably inform policymakers about. Existing methodologies for measuring progress in combating complex social phenomena such as drug trafficking and crime could contribute valuable insights. In designing metrics for measuring effectiveness of anti-terror efforts, one option might begin with three major categories: incidents, attitudes, and trends. This is one of many possible models. Analysis of the resulting data could address how well the process of terrorism is being disrupted, on both continuous and quantum scales. In the past, the number of terrorist attacks, or "incidents," were prominently displayed in publications such as the Department of State's annual Patterns of Global Terrorism reports. The reports also indicated how widespread the incidents were geographically, and how deadly they were in terms of persons killed or injured. But arguably neglected was the impact of such incidents--especially their effect on the macro-economy. Also, not fully clear is which attacks are important or meaningful enough from the standpoint of measurement to be considered "incidents." In attempting to measure incidents, some in the United States tend to define success in familiar ways: body counts and numbers. In a western, science-and-technology-oriented society, many feel that if a problem can be quantified, it can be solved. However, a common pitfall is overreliance on quantitative data at the expense of its qualitative significance. In previous years' Patterns of Global Terrorism reports, incidents were counted equally without regard to their broader impact. To the degree that terrorist constituencies are not from western cultures, their mindsets may not necessarily place a premium on quantification metrics, but rather on other values such as religious precepts, or honor or revenge. Western policymakers often tend to define success by the absence of attacks. When the shooting or bombing stops, for example, that is viewed as success. Yet terrorists sometimes define success in terms of making governments expend limited resources trying to defend an enormous number of potential targets. For terrorists, the absence of violent conflict may simply mean that they are focusing attention on economic, political, or social spheres, or just that they are in a "waiting period." Western policymakers often define success in terms of the amount of money confiscated from terrorist networks. Terrorists may define success in terms of the amount of money they force an opponent to squander to seize potentially insignificant amounts. Attitudes drive both terrorism and the world's response to terrorism. How do attitudes affect political decisions and sentiments in countries to contain and defeat terrorism, or to support it? How long can democratic governments pursue policies that pressure terrorists if such policies are seen as bringing on terrorist retaliation? Similarly, how much increase in economic costs and reduction in civil liberties will public opinion tolerate? Shaping attitudes to break or weaken the political will to combat terrorism is a central terrorist goal and an important indicator of success or failure. With regard to attitudes, terrorists often see success as breaking their opponents' will. They want to push the conflict into the political arena on the streets of Washington, London, Paris, Karachi, Moscow, and Madrid. They want the public to tire of the casualties caused by terror in places such as Baghdad, Chechnya, and wherever else they can strike a blow. They want the public to push governments to adopt policies of appeasement, or alternately, to force governments to spend beyond their means and to become increasingly oppressive and draconian towards their own populace. They may see public opinion concerning anti-terrorism policies as an Achilles heel, counting on protracted reaction of protest. Other attitudinal criteria include (1) negative psychological or behavioral impact of terrorism on a society, (2) loss of public confidence in governments, or in their security measures, (3) the degree to which terrorists are able to radicalize and polarize Islam against the West and vice versa, (4) the level of anti-American or anti-Western sentiments, and (5) the level of religious bigotry in countries which are breeding grounds for terrorists. Moreover, cultural differences may often also lead to different views concerning violence. Some societies have a warrior tradition and may not necessarily regard peaceful coexistence as a desirable goal. Certain theocracies may regard selective violence as being countenanced by scripture. Attitudes are central to shaping of consensus, or lack thereof. To the extent that nations can reach a multilateral consensus concerning shared anti-terror strategies, goals and measurement criteria, the United States may be more successful in obtaining the support and assistance of other nations in anti-terror efforts. Trends are changes of incidents, attitudes and other factors, over time. Measurement of trends is particularly relevant with regard to trends in terrorist infrastructure. Is their leadership being weakened; is their recruitment base, network, or target list growing? Relevant also are intentions (tactical and strategic goals). Have the intentions of a movement or group changed and if so are they more or less radical--more or less focused on causing widespread damage? Capabilities are important as well. What are the capabilities of a terrorist group to inflict serious damage? Are they increasing or decreasing? Other trends that might be measured include are: (1) the number of governments that do not embrace appeasement policies, (2) the number of defectors from the terrorist ranks, (3) the terrorists' levels of Internet activity, (4) the amount of media coverage they receive, and (5) the number of supporters and recruits they gain. A related issue here is how U.S. policies affect terrorists' popular support and recruiting. Also included here is the degree to which government bureaucratic institutions can work smoothly together, collectively adapting their strategies and tactics to keep up with and stay ahead of the methods utilized by individual terrorists and terrorist networks. Important as well is improvement in states' recovery capabilities and coping skills. Analysts are quick to point out that the United States is engaged in an ongoing campaign; not a war in the traditional sense. Key here is the ability to sustain a long-term campaign. This takes international cooperation. Trends in international cooperation are important in measuring progress against terrorism. Past threats have generally united America with its allies. Today, the threat of terrorism appears to be dividing America and some traditional allies. Moreover, significant international dissent may signal that future progress will be more difficult and costly. Effective responses to terrorism may need to take into account, and to some degree be individually configured to respond to, the evolving goals, strategies, tactics, and operating environment of different terrorist groups. Better understanding of the dynamics of terrorism allows for a more complete picture of the complexities involved in measuring success or failure and can assist the 110 th Congress as it coordinates, funds, and oversees anti-terrorism policy and programs. Although terrorism's complex webs of characteristics--along with the inherent secrecy and compartmentalization of both terrorist organizations and government responses--limit available data, the formulation of practical, useful measurement criteria appears both tractable and ready to be addressed.

This report is designed to support efforts of the 110th Congress to understand and apply broad based objective criteria when evaluating progress in the nation's efforts to combat terrorism. It is not intended to define specific, in-depth, metrics for measuring progress against terrorism. How one perceives and measures progress is central to formulating and implementing anti-terror strategy. Perception has a major impact, as well, on how nations prioritize and allocate resources. On the flip side, the parameters used to measure progress can set the framework for the measurement of failure. The measurement process is also inextricably linked to strategies. Progress is possible using diverse strategies, under very different approaches. The goals of terrorists and those who combat them are often diametrically opposed, but may also be tangential, with both sides achieving objectives and making progress according to their different measurement systems. Within the context of these competing views and objectives, terrorist activity may be seen as a process which includes discrete, quantum-like changes or jumps often underscoring its asymmetric and nonlinear nature. An approach which looks at continuous metrics such as lower numbers of casualties may indicate success, while at the same time the terrorists may be redirecting resources towards vastly more devastating projects. Policymakers may face consideration of the pros and cons of reallocating more of the nation's limited resources away from ongoing defensive projects and towards preventing the next quantum jump of terrorism, even if this means accepting losses. Measurement of progress, or lack thereof, may be framed in terms of incidents, attitudes and trends. A common pitfall of governments seeking to demonstrate success in anti-terrorist measures is overreliance on quantitative indicators, particularly those which may correlate with progress but not accurately measure it, such as the amount of money spent on anti-terror efforts. As terrorism is a complex multidimensional phenomenon, effective responses to terrorism may need to take into account, and to some degree be individually configured to respond to, the evolving goals, strategies, tactics and operating environment of different terrorist groups. Although terrorism's complex webs of characteristics--along with the inherent secrecy and compartmentalization of both terrorist organizations and government responses--limit available data, the formulation of practical, useful measurement criteria appears both tractable and ready to be addressed. This report will not be updated.

With its strategic regional context and a secular and pluralist democracy as well as its status as a moderate Islamist nation, Bangladesh is important to the United States. Although classified as a low-income nation by the World Bank, Bangladesh is a part of the "Next 11" (N-11); the term issued for nations with the largest population and lowest gross domestic product per capita, and the new emerging economies from the developing world. While the nation's growth potential and attraction to investors depends to an extent on its ability to control corruption, it is part of a group of developing nations which, along with the BRIC nations (Brazil, Russia, India, and China), will hold nearly 70% of the world's total population. In May 2013, the Office of the Spokesperson of the U.S. Department of State released the Joint Statement of the Second U.S.-Bangladesh Partnership Dialogue, highlighting the importance of the nation's development and governance, its partnership of Bangladesh with U.S. agricultural development programs, the possibility of promoting more renewable energy sources, as well as its importance in security measures, including the "continued collaboration in countering extremism, counterterrorism, security assistance, United Nations peacekeeping operations, and humanitarian assistance." U.S. policy toward Bangladesh emphasizes support for political stability and democracy, economic development, liberalized trade and investment, human rights, and some military-to-military exchange. The United States has long-standing supportive relations with Bangladesh and views Bangladesh as a moderate voice in the Islamic world. The U.S. Department of Defense's Pacific Command works closely with Bangladesh to help expand and improve Bangladesh's peacekeeping, humanitarian assistance, disaster relief, and maritime security capabilities. Bangladesh is viewed by the United States as an important regional actor. The U.S. encourages Bangladesh to allow the "free movement of ideas, goods, and people" and to enhance "regional peace and prosperity." The State Department views U.S. assistance as vital to strengthening the country following its return to a democratically elected government in 2008. The Obama Administration's Foreign Operations budget request for the 2014 fiscal year seeks to support long-term development in Bangladesh by "addressing the underlying social, demographic, and economic factors that inhibit economic growth and increase vulnerability to extremism." Due to the moderate form of Islamic belief that is prevalent in Bangladesh, the country is valued for its "strong secular and democratic heritage." Bangladesh is a contributor to international security and is valued for its efforts in "countering violent extremism, assisting international peacekeeping, and improving regional connectivity." Bangladesh and the United States have a common interest in working to counter extremist Islamists and their ideology. Dhaka is a very active participant in international peace operations. Bangladesh has traditionally been and continues to be one of the largest contributors of military and police contingents to United Nations Peace Operations. As of May 2013, 8,836 U.N. police, peacekeeping troops, and U.N. military experts were contributed to United Nations peacekeeping missions. Bangladesh is situated at the northern extreme of the Bay of Bengal and could potentially be a state of increasing interest in the evolving strategic dynamics between India and China. This importance could be accentuated by the development of Bangladesh's energy reserves and by regional energy and trade routes to China and India. China has become one of Bangladesh's key suppliers of military equipment. At the same time, Bangladesh seeks closer ties and greater cooperation on a range of issues with India. The May 2013 Bangladesh-U.S. Partnership Dialogue in Dhaka sought to improve the ties between the two nations through governance programs, economic trade, security cooperation, and regional integration. The United States has promised assistance through USAID and President Obama's Global Health Initiative to improve medical detection of infectious diseases, environmentally sustainable initiatives, and nutritional programs to promote local agriculture and increase consumption. In addition, the United States seeks to increase assistance programs for law enforcement, promote business connections, and to transfer a Coast Guard vessel to the Bangladesh Navy. Moreover, U.S. representatives "participated in a roundtable discussion with government, labor, owners and buyers on labor issues in the garment sector." Workers' rights have long been a concern in Bangladesh, and U.S. attention on the issue was greatly heightened with the collapse of a Bangladesh factory that produced garments for consumers in the United States and Europe on April 24, 2013, resulting in the deaths of more than 1,100 workers. The accident is considered the deadliest accident in the history of the apparel industry. The United States has provided Bangladesh with relief from tariffs in the past, under the World Trade Organization's Generalized System of Preferences, to generate trade and economic cooperation in economically emerging nations. These trade privileges for Bangladesh were suspended in June 2013, in the aftermath of the factory disaster, due to concern about labor rights violations in Bangladesh. The goal of the suspension was to encourage Dhaka's actions towards the improvement of labor rights. On July 10, 2013, North American retailers introduced a five-year plan through the Alliance for Bangladesh Worker Safety, which focuses on annual inspections of 500 Bangladeshi factories. It includes 17 retailers and apparel companies including J.C. Penney Co., GAP Inc., Target, and Wal-Mart. The plan, which has raised $42 million as of July 2013, will run on company contributions. It is projected that companies will contribute up to $1 million a year for five years based on how much they produce in Bangladesh. In addition: Ten percent of the funds will be set aside to assist workers temporarily displaced by factory improvements or if a factory closes for safety reasons. The money will also support a non-governmental organization to be chosen within 30 days that will implement parts of the program. The accord seeks to address factory inspections and safety commitments; common safety standards for factories; worker training; the incorporation of worker's voices through anonymous hotlines; a governing body for the alliance; semi-annual progress reports; support for improvement of factories; and increased involvement with the Bangladeshi government, through local industry groups and worker rights organizations. The plan has been met with criticism by workers' rights groups that note that without the involvement of Bangladeshi workers, and without legal consequences for participating companies, the project cannot succeed. For additional information see CRS Report R43085, Bangladesh Apparel Factory Collapse: Background in Brief , by [author name scrubbed]. The State Department 2014 Budget Justification Document discusses U.S. assistance to Bangladesh by both account and objective. The accounts are specified in Table 1 below. Additional U.S. assistance for Bangladesh could be in the area of the environment and climate change adaptation and mitigation assistance, as the consequences of climate change for this low-lying nation may increase dramatically in the years ahead. (See " Environmental Concerns, Climate Change, and Food Security " section below.) The U.S. Agency for International Development (USAID) is working with Bangladesh on a multi-stakeholder approach that uses a co-management model to link management authorities and local communities to achieve sustainable natural resource management and biodiversity conservation. Two USAID pilot projects have been carried out. These projects focused on the Management of Aquatic Ecosystems Through Community Husbandry and the Co-Management of Tropical Forest Resources. Under provisions in the U.S. Tropical Forest Conservation Act, the government of Bangladesh and the U.S. government have agreed to pursue a debt-for-nature swap to promote tropical forest conservation in Bangladesh. A majority of U.S. infrastructure and development assistance in Bangladesh through USAID focuses on health programs. USAID devoted $10 million in assistance in both FY2011 and FY2012 to HIV/AIDS prevention, family planning, child nutrition, and assistance for tuberculosis. USAID prioritizes care for women and children, whose health status is particularly poor. Bangladesh is a parliamentary democracy that has traditionally been led by one of two political parties, the Bangladesh National Party (BNP) and the Awami League (AL). The AL has led the government since January 2009. The AL is led by current Prime Minister Sheikh Hasina while the BNP is led by former Prime Minister Khaleda Zia. When in opposition, both parties have sought to regain control of the government through transport blockades, demonstrations, and general protests and strikes also known as Hartals . In June 2011, the opposition BNP Party initiated a Hartal to protest government plans to revise the caretaker government provision (see below). Political violence has long been part of the political landscape in Bangladesh. In 2004-2005, a particularly intensive set of bombings carried out by militants raised questions about political stability. Since that time Bangladesh has done much to curb militant Islamist activity. The Awami League won an overwhelming electoral victory in the 2008 election and captured 229 of 300 parliamentary seats in Bangladesh's unicameral legislature. The BNP captured only 31 seats in 2008. The AL is the lead party in the Grand Alliance that includes 14 other political parties. The AL does not require their support to govern for its full five-year term of office. The next parliamentary elections must be held by April 2014. As a low-income nation, Bangladesh argues that it has the right to deny entry to refugees from Burma, which has raised major concerns in the international community. The nation is also accused of unequal rights to women, human trafficking, as well as the lack of attention to violence against minority groups. The U.S. Department of State 2012 Human Rights Report details that "the most significant human rights problems were enforced disappearances, discrimination against marginalized groups, and poor working conditions and labor rights." Discrimination of women and indigenous people as well as extrajudicial deaths have been raised as points of concern by Human Rights groups. The Human Rights Report also found that, "As in the previous year, the government did not take comprehensive measures to investigate and prosecute cases of security force killings." Furthermore, it found that, "Weak regard for the rule of law not only enabled individuals, including government officials, to commit human rights violations with impunity but also prevented citizens from claiming their rights." Human Rights Watch notes that Bangladesh's human rights violations increased in 2012, as the government ignored the need "to reform laws and procedures in flawed war crimes and mutiny trials" and protected security forces that remain unprosecuted for human rights violations. The group notes, "Civil society and human rights defenders reported increased governmental pressure and monitoring." Human rights were further aggravated in 2012 and 2013 by Bangladesh's denial of Burmese refugees, from an Islamic ethnic group, the Rohingya, whose member sought refuge from violence within Burma. The ethnic group was blocked from entry, and denied humanitarian assistance, and protection. An estimated 200,000 Rohingya refugees currently live in Bangladesh, many of whom are unregistered by the government. Bangladesh suffers from high rates of human trafficking, though government officials are attempting to curb the number of exploited people through a committee created in 2011 that seeks to monitor and prevent human trafficking. As of 2013, Bangladesh stands at a Tier 2 level of the U.S. Department of State's Trafficking in Persons Report. According the U.S. Department of State, "Girls and boys as young as eight years old are subjected to forced prostitution within the country, living in slave-like conditions in secluded environments. Trafficking within the country often occurs from poorer, more rural regions, to cities. " Many of the children are sold into prostitution due to poverty or are introduced into the system by fraud. Recruitment fraud of Bangladeshi immigrants into the Gulf region has proved particularly challenging, while the majority of trafficked women and children, sexually exploited workers and forced laborers are sent to Pakistan and India. Although the Ministry of Home Affairs established a National Plan of Action for Combating Human Trafficking in January 2012, the government has been ineffective in properly curbing human trafficking. Two political leaders from the BNP and five from the Jamaat-i-Islami have been arrested under the International Crimes (Tribunals) Act and accused of war crimes dating back to Bangladesh's war of secession and independence from Pakistan in 1971. The BNP and Jamaat have opposed the ongoing trials and view them as a move that can help the AL further consolidate its political advantage. As many as three million people were killed and 10 million displaced during the 1971 war that was fought between independence forces in then-East Pakistan, with assistance from India, and the Pakistani army that was largely composed of troops from then West Pakistan. The trials are aimed at those in Bangladesh who allegedly committed war crimes, many of whom are thought to have supported West Pakistan against the Bengali nationalists. Suspects include leading members of the Jamaat-i-Islami Party, the largest Islamist political party in Bangladesh. Jamaat had a paramilitary wing, Al-Badr, which collaborated with the West Pakistani military during the war for independence and is thought to have assassinated journalists and academics sympathetic to Bengali independence. Bangladesh has struggled to stabilize relations between Islamist extremists and its minority religious populations, especially Hindus and Buddhists. While Muslim clerics express their condolences and the aberration against Islam that the attacks represent, the religious minorities in the area have faced persecution since independence. The violence against these communities, especially during the war in 1971, have led to mass movements of victims to India and a drop of the Hindu population from 30% of Bangladesh's population in 1947 to 10% today. Attacks on Buddhist populations in the Chittagong District have continued for years, worrying Sri Lankan communities in the region as well as the Sri Lankan government. Other minority religions that have been discriminated against include Judaism, which has been targeted in the media, and the Ahmadiyya Muslim community. Many Members of Congress have an interest in promoting women's issues through American development assistance programs including those in Bangladesh. Bangladesh ranks poorly in standards used to judge the rights, abilities, and living standards of women worldwide. For example, in 2012, the UNDP ranked Bangladesh 81 st out of 93 countries on the Gender Empowerment Index, a ranking determined by the number of parliament seats held by women, female professionals, technical workers, and senior officials, as well as the female to male ratio in the nation. The Global Gender Gap Index of 2012, a measure created by the World Economic Forum based on measures of economic participation and opportunity, educational attainment, health and survival, and political empowerment factors, placed Bangladesh at 86 th out of 135 nations. Nevertheless, Bangladesh has remained relatively better than some other Islamic nations, including Pakistan, which ranked 134 th out of 135. For many poor Bangladeshi women with limited education, the booming textile market of the nation has provided opportunity to work. Nearly 3.6 million women (about 80% of the entire industry ) work in Bangladesh's garment industry as of 2013, which, according the UNDP, is "a way out of rural poverty for thousands of Bangladeshi women, as is the case in many other parts of the developing world." A source reports that garment factories remain the most dominant employment opportunity for women, noting that "A World Bank study found in 2008 that compared with other countries, agriculture does not employ as many women in Bangladesh. World Bank experts say this is because land-holding size and agricultural productivity have been historically low, leading to low demand for labour." In light of the April 2013 garment factory tragedy, Bangladesh and Western governments hope to collaborate on effective reforms for the safety and labor standards for workers in garment factories. The nation is calling on Western investors of the garment industry to ensure that wages are improved from their current $38 per month fare--one of the worst rates in Asia--and to ensure the structural qualities of the factories. Bangladeshi activists as well as development experts note that an improvement in the textile industry and its millions of female workers, would spur Bangladesh's development, through women's tendency to invest steady incomes on the nutrition, education, and healthcare of their families. The garment industry remains an option to avoid the physical toil of agriculture, or as construction workers or house maids. The increased employment in new textile and garment industries has both created the opportunity for empowerment and heightened social tensions in Bangladesh. The Guardian notes that, "While the garment industry has benefited from the cheap labor offered by women--who tend to work for less than men--the industry has reduced the marginalisation of women who were excluded from formal sector jobs." Although providing a route out of poverty to many Bangladeshi women, the right of a female to work without the accompaniment of a male guardian is often questioned by religious fundamentalist in the Islamic-majority nation. Although they provide a large portion of Bangladesh's remittances, women also suffer from vulnerability to abuse and health risks through undocumented migration to the Persian Gulf, India, and other centers of work. Several international and non-governmental organizations are actively involved in reversing the harmful effects of undocumented migration and empowering Bangladeshi women, including the U.N. Women Bangladesh Program Office's Regional Program to Empower Women Migrant Workers in Asia. USAID also remains an active participant in Bangladesh's struggle for women's equality. The agency notes, "Gender inequity is a cross-cutting issue that affects the long-term development of Bangladesh and hinders economic growth." USAID hopes to incorporate recommendations in projects to increase gender participation; require partners of the organization to develop exercises related to gender parity; have a gender advisor for all project considerations; and assess programs based on gender equity goals. Bangladesh has suffered through multiple coups and often tense relations between the military and successive civilian governments, since its independence in 1971. Although a parliamentary democracy, since 1990, it "has seen two presidents killed in military coups and 19 other failed coup attempts," which have included the deaths of Hasina's father, Sheikh Mujibur Rahman as well as her opposition, Khaleda Zia's husband, Ziaur Rahman. Tensions between the military and the government over corruption, poor pay, and poor benefits led members of a paramilitary unit to mutiny on February 25, 2009, and kill 57 officers and 15 of their family members. The two-day mutiny was quickly suppressed by the army. Army Chief of Staff General Muhammad Abdul Mubeen supported Prime Minister Hasina during the mutiny. More recently, a government deal with Russia has provided the Bangladeshi military with additional arms. After bilateral talks in January 2013, Russia agreed to grant $1 billion in loans for arms purchases to improve military and technical cooperation between the nations. This deal was in addition to Russian grants to Bangladesh's nuclear power plant construction, which currently remains in the initial stages of the project. Bangladesh was originally founded on secular-socialist principles and grounded in an ethnic Bengali nationalism as opposed to a Muslim religious identity. Some have attributed the rise of Islamist influence in Bangladesh to the failure of Bangladeshi political elites to effectively govern or to provide moral leadership and effectively represent the interests of the masses. Some believe this created political space for the Islamists to gain influence during the previous BNP government. The U.S. Department of State notes that The Government of Bangladesh has demonstrated its commitment to combating domestic and transnational terrorist groups, and its counterterrorism efforts made it harder for transnational terrorists to operate in or establish safe havens in Bangladesh. The United States offers assistance to Bangladesh for counterterrorism prevention, monitoring and detection. Several militant extremist groups have operated in Bangladesh, including Jamaat-e-Islami, a group with known connections to Al Qaeda. Other radical groups include Harkat-ul-Jihad-al-Islami (HuJI) and the Islamic Oikya Jote, both of which have some international linkages. While Bangladesh has suffered a number of terrorist attacks in the last decade, the government is taking serious steps to curb extremist groups. The struggle between radicalism and moderate Islam played out in early 2013, when protestors took to the streets of Dhaka in mass numbers to oppose the Hefajat-e-Islam (Protectorate of Islam), an Islamist group, and the government petition to enforce the death penalty on those who blasphemed Islam. The radical Islamist measures seek to punish those who allowed men and women to mix freely and foreign influences, to enforce a mandatory Islamic education and to reinstate religious aspects in the secular nation's constitution. The conflict claimed at least 150 lives by May 2013. CNN reported that "What is happening in Bangladesh is a push and pull between two forces to determine the future direction of the country"; it is a struggle between Bangladeshi youths, inspired by social media sources to moderate Islamic fundamentalism in the nation, and Islamic radicals who criticize protestors as anti-Islamic atheists. The United States assists with Bangladesh and other South Asian nations' counterterrorism efforts through military training assistance. The United States' assistance has been especially important for disaster response, terrorism prevention, and to contain radical terrorist groups. The Government of Bangladesh has also attempted to curb terrorism in recent years through social measures that especially focus on the youth. According to the Country Reports on Terrorism published by the United States Department of State Bureau of Counterterrorism, "The Ministry of Education provides oversight for madrassas and is developing a standard national curriculum that includes language, math, and science curricula; and minimum standards of secular subjects to be taught in all primary schools, up to the eighth grade," and the "Ministry of Religious Affairs and the National Committee on Militancy Resistance and Prevention work with imams and religious scholars to build public awareness against terrorism." The government has additionally focused on economically empowering women to "buffer against violent extremist messages of male religious leaders." The Bureau of Democracy, Human Rights, and Labor reports that "The U.S. government offered programs to madrassah students and teachers on religious tolerance, human rights, and gender equality, among other topics. The embassy reached out to influential leaders nationwide, including religious leaders, to introduce the concepts and practices of modern development and democracy through training." USAID and the Bangladesh Ministry of Religious Affairs, as well as the Islamic Foundation, have also cooperated to create a Leaders of Influence (LOI) project in 2011 for Bangladesh which is, in part, used to train Muslim leaders, imams, and other religious leaders of the necessity to promote democracy, tolerance, family planning and social harmony. Bangladesh is a nation of strategic importance not only to the South Asian sub-region but to the larger geopolitical dynamics of Asia as a whole. The Bengalis' struggle with West Pakistan was at the center of the 1971 Indo-Pakistan war. The creation of the independent state of Bangladesh at that time forever weakened Pakistan's position relative to India. This has enabled India to operate as a key actor not only in South Asia, but in Asia as a whole. As a result, in the view of many, India could potentially challenge and/or balance China's emerging strategic posture in Asia. In this way, Bangladesh has played, and will likely continue to play, a role in the shifting regional balance of power between India and China. Some Bangladeshi strategic thinkers believe that the nation should pursue closer ties to China as a strategic counterweight to Bangladesh's relationship with India. The 2010 opening of road and rail routes through Chittagong and Mangla ports in Bangladesh to India's northeast has led others in Bangladesh to talk of developing trade linkages to China. The opening of Burma holds the prospect of further connectivity with the members of the Association of Southeast Asian Nations (ASEAN). Prime Minister Hasina traveled to China in March 2010 to seek closer cooperation with China in a number of areas. These include Chinese cooperation to construct a deep sea port at Chittagong and to establish a road link from Chittagong to Kunming, China. Some have also called for Chinese investment in developing a deep seaport at Sonadia, which is relatively close to Bangladesh's border with Burma, and using Kunming-Burma road linkages. China reiterated its support for the Deep Sea Port in Chittagong in June 2011. A "Closer Comprehensive Partnership of Cooperation" joint statement was issued on March 19, 2010, to take bilateral relations between China and Bangladesh forward. The statement called for intensifying cooperation in a number of areas that include sharing hydrological information on the Brahmaputra, intensifying exchanges, Chinese dredging of river beds, enhancing transportation links, increasing bilateral trade, and strengthening exchange and cooperation between the two states' militaries "to safeguard respective national security and stability and promote peace and stability in the region." Bangladesh has reaffirmed its One China policy and expressed support for China's efforts to enhance its cooperation with South Asian Association of Regional Cooperation (SARC) countries. One issue that bedevils Sino-Bangladesh ties is China's hydropower plans on rivers that flow into South Asia--concerns that are particularly acute in low-lying Bangladesh. China announced plans in 2010 to build a massive dam on the Yarlung Tsangpo River on the upper reaches of the Brahmaputra River. Observers in Bangladesh are concerned about the impact that this and other possible dams may have on the flow of the Brahmaputra including the possible diversion of its flow within China. Ongoing engagement by China with South Asian states, particularly in the area of developing port access, has led to suspicion of China's motives among some in strategic circles in India and the United States. From this perspective, port development in Bangladesh could be seen as part of a "string of pearls" strategy that could in the future be used by China to secure sea lanes that cross the Indian Ocean and link its industrialized eastern seaboard with the energy resources of the Middle East. China has been developing ports in Gwadar, Pakistan, and at Hambantota, Sri Lanka. Prime Minister Hasina has pursued improved relations with India as well as with China. India supported Bangladesh's struggle for independence from West Pakistan, of which Bangladesh was a part from 1947 to 1971. As one source points out, "The improved relations are largely due to her efforts to stamp out anti-Indian sentiment in Bangladesh." Despite this, relations between India and Bangladesh have been strained at times due to border disputes, the presence of Islamist militants in Bangladesh, and Indian concern that insurgents from India's northeast have sought refuge inside Bangladesh. In September 2011, representatives from India and Bangladesh met to draft an agreement for economic and social cooperation and long-term peace and understanding titled "Framework Agreement on Cooperation for Development." Some observers believe the framework is intended to "neutralize China's growing influence" in Bangladesh by providing "more economic leverage to Bangladesh and allow Bangladesh to have a bigger share of India's growing economic success." The agreement addresses many points of contention between the nations including deportment of terrorists harbored in nations, as well as Bangladesh's illegal immigrants and the status of migrant workers. In addition, it promises disaster management aid, scientific, educational, and cultural cooperation between the two nations, environmental protection measures, shared water resources and ties with India's $1 billion pledge in investments for Bangladesh's infrastructure. Bangladesh has also joined in Indian plans in sharing a hydro-power project in northeastern India. Bangladesh hopes to "obtain a meaningful portion of the power so produced (whether jointly or otherwise" through this deal. The World Bank reports that more than 60% of people do not have access to electricity in Bangladesh. Although it remains one of the world's poorest nations, Bangladesh has experienced consistently sound rates of GDP growth over the past decade. Manufacturing, particularly of readymade garments, and remittances remain key aspects of the Bangladesh economy. Per capita GDP has grown due to economic expansion and slower rates of population growth. GDP almost tripled from 1994 to 2010 while per capita income rose from $325 in 1998 to $588 in 2011. Bangladesh's GDP is generally expected to grow by about 6% in 2013. Despite these achievements much more will have to be done to continue to accommodate the increasing numbers of Bangladeshis entering the workforce. Bangladesh-U.S. trade has been expanding in recent years, and the United States is Bangladesh's largest trading partner. Although the two nations have discussed a Trade and Investment Framework Agreement (TIFA), Bangladeshi concerns over environmental, labor, and intellectual property provisions have made it reluctant to move forward with a TIFA. American trade and investment interests in Bangladesh include developing natural gas reserves thought to be found in the Bay of Bengal off Bangladesh's coast. Bangladesh is highly dependent on remittances from Bangladeshis working overseas, which account for 12% of GNP. Two-thirds of Bangladesh revenue from remittances comes from the Middle East. There are an estimated six million Bangladeshis working abroad. They make Bangladesh one of the world's largest sources of overseas workers. Bangladesh textile exports, which are another source of foreign exchange, are reportedly doing well, which may in part offset remittances shortfalls. In January 2013, Bangladesh revoked its request for financing from the World Bank, objecting to conditions placed on the package, and opted to instead to seek some financial assistance from Russia, which loaned $500 million to Bangladesh for its nuclear power program. Bangladesh is one of the countries of the world thought most likely to suffer the adverse effects of climate change. Some view it as the most vulnerable country to the negative impact of climate change, due to its low-lying geography. Demographic pressure and environmental problems, including those linked to climate change, are increasingly problems for Bangladesh as well. The low-lying nation would be significantly affected by projected sea level rise. Some projections are now estimating that, at "the present rate of 8mm a year it may only take about 25 years to raise levels 20cm, enough to permanently waterlog and destroy the land and drinking water of as many as 10 million people in the south of the country." Increasing temperatures during growing seasons in key food exporting nations globally have reduced potential yields and contributed to rising prices. Threats to food production come at a time when global population is projected to increase to 9 billion by 2050. Such climate-related challenges as well as an increasing population, when combined with poor economic resources and limits on the extent to which agricultural output can be expanded, could prove to be politically destabilizing in the future. Rising sea levels and increased salinity in low-lying areas are thought to be responsible for undermining forest health and leading to lower crop yields. The Intergovernmental Panel on Climate Change (IPCC) has projected that rice and wheat production in Bangladesh could decrease by 8% and 32% respectively by the year 2050 and that rice yields will likely decrease by 10% for every one degree Celsius rise in growing-season minimum temperature. A World Bank Report notes that Bangladesh remains a potential impact hotspot, due to climate change, with more severe river floods, tropical cyclones as well as rising sea levels and high temperatures expected in the future. Bangladesh reached food self-sufficiency in the 1990s due largely to the introduction of "green revolution" technologies and higher-yielding varieties of rice. Despite this, Bangladesh imports rice, though it is decreasing its rate of importation substantially. In 2012's outgoing fiscal year, Bangladesh's imports of rice and wheat dropped to 2.24 million tonnes from 5.15 million tonnes in 2011. Bangladesh's lack of resources to accommodate those displaced by environmental changes, and already stressed conditions due to extreme population density, could lead to further cross-border migrations into bordering India, which could exacerbate existing border tensions. Due to the severe consequences and environmental degradation of Bangladesh, both the international community and the regional governments have sought to reduce the impact of climate change in recent years. While the nation promised to significantly comply, and improve measures to ensure environmental sustainability, it cautions that, "given its resource limitations, the country needs finance and technology transfer as well as capacity enhancement support, consistent with the properly defined tasks that it will take to move steadfastly towards the goal of sustainable development." USAID is also an active participant in environmental conservation in Bangladesh. In a 2008 Integrated Project Area Co-management (IPAC) project, a five-year investment of $13 million was made to "promote and institutionalize an integrated Protected Area (PA) co-management system for sustainable natural resources management and biodiversity conservation that results in responsible, equitable economic growth and good environmental governance." The organization also accepts that it will adjust its policy towards Bangladesh based on immediate needs, and to cater to long-term goals.

Bangladesh (the former East Pakistan) is an Islamic-majority nation in South Asia, bordering the Bay of Bengal, dominated by low-lying riparian zones. It is the world's eighth-largest country in terms of population, with 164 million people housed in a land mass the size of Iowa. Roughly 80% of Bangladesh's population lives on less than $2 per day. It suffers from high levels of corruption and, at times, a faltering democratic system that has been subject to pressure from the military, though the nation has an established reputation as a largely moderate and democratic majority Muslim country. U.S. policy toward Bangladesh emphasizes support for political stability and democracy, development, and human rights. The United States has long-standing supportive relations with Bangladesh and views Bangladesh as a moderate voice in the Islamic world. The United States offers economic assistance to Bangladesh, and has military-to-military ties that include cooperation in multilateral peacekeeping. Bangladesh is also of interest to the United States for the role it plays in the larger geopolitical dynamics of South Asia. Bangladesh has been under threat from a combination of political violence, weak governance, poverty, corruption, and Islamist militancy. There has been concern in the past that influence by Islamist extremists could increase and destabilize the country. Such concerns have abated somewhat in more recent years as Islamist militants have been vigorously pursued by authorities and as Bangladesh has returned to democratic government. That said, experts continue to warn that militants may regroup and present new challenges in Bangladesh despite the significant efforts by the government of Bangladesh against them. The Bangladesh National Party (BNP) and the Awami League (AL) traditionally have dominated Bangladeshi politics, with the AL in power since January 2009. The AL is led by Prime Minister Sheikh Hasina while the BNP is led by former Prime Minister Khaleda Zia. When in opposition, both parties have sought to regain control of the government through demonstrations, labor strikes, and transport blockades. The current Hasina government came to power with an overwhelming majority in parliament. It has moved forward with a war crimes tribunal to prosecute atrocities from the 1971 war of independence from Pakistan. The Hasina government has also moved to strengthen ties with both India and China. With the help of the army, it successfully suppressed a mutiny by the Bangladesh Rifles, a border guard unit, in February 2009. Demographic pressure and environmental problems, some likely exacerbated by climate change, are increasingly problems for Bangladesh. A rising population, when combined with limited economic resilience and limits on the extent to which agricultural output can be expanded, could prove to be politically destabilizing in the future. Bangladesh's population increases by approximately 2.2 million each year. This raises urgent questions concerning Bangladesh's future food security. Minority groups in Bangladesh, as well as women's rights and security are threatened due to socio-religious prejudices. Another key concern is worker rights and worker safety. Bangladesh is an important part of global supply chains, particularly in the textile industry, and successive factory disasters there have increased global and U.S. concerns about its labor rights regime.

Several lawmakers and the Obama Administration have recently expressed interest in taxing large partnerships and S corporations, also known as pass-throughs, as corporations. In early 2011, Senate Finance Committee Chairman Max Baucus suggested the possibility of taxing pass-throughs earning above a certain income as corporations. That same year, Treasury Secretary Tim Geithner said "Congress has to revisit this basic question about whether it makes sense for us as a country to allow certain businesses to choose whether they're treated as corporations for tax purposes or not." Most recently the President proposed creating parity in the tax treatment of large corporate and non-corporate businesses. House Ways and Means Committee Chairman Dave Camp, however, has expressed his opposition to such a policy change. Two concerns appear to be driving the interest in taxing large pass-throughs as corporations. First, projected deficit and debt increases have highlighted the possible need for revenue increases. Pass-throughs may be a source of revenue since they currently comprise over half of all business income but generally pay no corporate tax. Instead, the income of these companies, as the name suggests, "passes through" the business directly to the owners where it is taxed according to individual tax rates. Although no official revenue estimates exist, calculations by economist Martin Sullivan suggest that federal tax revenues may be between $13 billion and $47 billion lower annually than could otherwise be expected because of the shift away from the corporate form towards the pass-through forms. The shift has led to a reduction in corporate tax revenues, which has not been completely offset by increased individual tax revenue. Second, discussions of tax reform have expressed concern about the equity, efficiency, and complexity of the general business tax environment in existence today, and in some cases the distinction between corporate and non-corporate businesses specifically. Today, two businesses that are otherwise identical other than that one is a corporation and one is a pass-through are taxed differently. This disparity could be viewed as inequitable since the firms are similarly positioned to pay taxes. Additionally, the lack of tax uniformity across business types is believed to result in too much investment in the non-corporate sector where the after-tax return on investment is higher. Taxing large pass-throughs as corporations, when combined with other reform proposals such as eliminating or reducing corporate tax preferences and loopholes, would broaden the corporate tax base and allow for lower tax rates. These changes could potentially increase economic efficiency relative to the current policy. Estimates by CRS suggest that limiting the ability to avoid corporate taxation could potentially broaden the base enough to allow for a revenue-neutral corporate rate reduction of three percentage points. This report uses aggregate and industry-level tax data to analyze how many partnerships and S corporations could be subject to the corporate tax. Analysis of the data suggests that between 0.3% and 1.5% of all partnerships and S corporations could be taxed as corporations depending on what constitutes a "large" pass-through. Although this fraction is a relatively small share of pass-throughs, this report also indicates that these largest pass-throughs account for a disproportionate share of receipts and assets. Thus, while only a small number of firms may be affected by such a proposed policy change, the revenue generated could potentially be significant. There are alternative policy prescriptions that can promote business tax uniformity and increase efficiency. Integrating the corporate and individual tax systems so that all business income is only taxed once is one such alternative. Integration would promote tax uniformity since all businesses would be taxed equally. Integration could also increase efficiency by removing a layer of taxation as well as possibly other distorting features of the corporate tax. For these reasons integration is generally appealing to economists. If, for whatever reason, integration is not possible, then reducing the tax discrepancy between large pass-throughs and corporations may be a viable policy alternative. The various design and administrative issues surrounding tax integration, however, put an analysis of such a proposal beyond the scope of this report. The impact on businesses is not the only perspective one can take when it comes to changing the tax treatment of pass-throughs. CRS Report R42359, Who Earns Pass-Through Business Income? An Analysis of Individual Tax Return Data , by [author name scrubbed] examined the issue of pass-through taxation from the perspective of individual taxpayers. That report concluded that although the corporate tax would be levied on pass-throughs, individuals would bear the full burden of the tax since businesses are legal, not physical entities. In addition, the analysis in that report suggests that higher-income taxpayers would generally bear most of the burden from increased pass-through taxes because they earn the majority of pass-through income and are limited in their ability to shift the burden to lower-income taxpayers. The remainder of this report is organized as follows. First, a brief overview of tax revenue and trends in business organization is presented. Next, pass-throughs are compared with their corporate counterparts. Aggregate and industry-level estimates of the number of partnerships and S corporations that could be taxed as corporations are then presented. Finally, policy options and considerations are reviewed. Part of the interest in taxing large pass-throughs as corporations stems from the decline in corporate tax revenue. In the post-World War II era, corporate tax revenue as a share of gross domestic product (GDP) peaked in 1952 at 6.1% and has generally declined since (see Figure 1 ). Today, the corporate tax generates revenue equal to approximately 1.3% of GDP, although projections (not shown here) have the corporate tax revenue rising to 2.4% of GDP in several years as the economy recovers and temporary investment incentives (bonus depreciation) expire. Despite this decline, an increase in payroll tax revenue from 1.4% of GDP in 1946 to 6.0% in 2010 has helped to support overall federal tax revenue. A number of reasons for the decline in corporate tax revenues have been indentified (see CRS Report R42113, Reasons for the Decline in Corporate Tax Revenues , by [author name scrubbed]). First, the average effective corporate tax rate has decreased over time, mostly as a result of reductions in the statutory rate and changes affecting the tax treatment of investment and capital recovery (depreciation). Second, corporate-sector profitability has fallen over time, which has eroded the corporate tax base. And third, an increasing fraction of business activity has shifted to partnerships and S corporations, which are not subject to the corporate income tax, further eroding the corporate tax base. Figure 2 shows just how significant the shift in business activity has been. In 1980, C corporations generated 78% of net business income in the United States. By 2008 however, the corporate sector was responsible for only 27% of all business income. Over the same time period, the share of income attributable to partnerships and S corporations grew from 4% to 54%. These trends are partly due to the Tax Reform Act of 1986 (TRA86), which increased the attractiveness of choosing a pass-through form over the corporate form by lowering the highest individual income tax rate six percentage points below the highest corporate income tax rate. Additional legislative changes in the early 1990s allowed S corporations to have more shareholders, and that same decade regulatory changes enabled LLCs to be taxed as partnerships. These policy changes increased the attractiveness of pass-throughs and, in the case of the S corporation shareholder limit increase, allowed them to be larger. How do large pass-throughs compare with corporations? This question is slightly more complicated than it appears since there are several different ways to measure firm size. Size could be measured by employment, profits, assets, or a variety of other statistics. Additionally, two different industries may require different measures of size. For example, one industry may be more capital intensive than another, leading firms in that industry to naturally have more assets, whereas firms in another industry may generally have fewer assets while still employing a large number of workers. Data availability, however, limits the analysis presented here to using just two different measures of firm size--a receipt-based measure and an asset-based measure. Table 1 compares large S corporations and partnerships with large corporations based on business receipts. The table displays data for two different categories of firm size--firms with receipts between $10 million and $50 million, and firms with receipts over $50 million. The $10 million to $50 million category arguably contains some firms that many would not consider large since $10 million in receipts is right on the boundary between the definition of a small and medium size business. However, refinement of the size thresholds is impossible since the IRS has already organized the data in this fashion. Still, the category contains some larger pass-throughs since it includes firms with receipts up to $50 million. Without knowing exactly where the receipt threshold may be for the tax it is useful to compare business across both size categories. Table 1 shows that there were more pass-throughs (87,674) than corporations (67,144) with receipts above $10 million. There were also nearly as many pass-throughs (15,360) as corporations (16,516) with receipts exceeding $50 million. These figures are not too surprising since there are more S corporations and partnerships than C corporations in total. These figures do, however, highlight an important fact that is often overlooked--the term pass-through is not necessarily synonymous with the term "small business." The data also show that average receipts of medium to large size pass-throughs (firms with receipts of $10 million to $50 million) are nearly identical to average receipts of similar sized corporations. This makes sense given that Table 1 groups the data according to receipts. There is, however, a noticeable difference in the average receipts of the largest pass-throughs and corporations. For corporations with receipts over $50 million, average receipts are nearly $700 million, while the largest S corporations average receipts of $128 million, and the largest partnerships average receipts of $302 million. Thus, while there are a significant number of large pass-throughs, the largest corporations, when measured by receipts, are over five times larger than the average S corporation, and more than twice as large as the average partnership. Another similarity between pass-throughs and corporations is the concentration of receipts among a very small percentage of large firms. About 30% of S corporation receipts are generated by the largest 0.3% of S corporations, and 41% of partnership receipts are generated by the largest 0.2% of partnerships. In comparison, the largest 0.8% of corporations are responsible for 83% of corporate receipts, indicating that there is an even greater concentration of receipts among the largest corporations than there is among the largest pass-throughs. Including firms with receipts between $10 million and $50 million increases the fraction of activity concentrated among large pass-throughs and corporations. Thus, while only a small percentage of partnerships and S corporations could be considered large and therefore subject to the corporate tax, these large pass-throughs could potentially generate a significant amount of tax revenue because they account for a disproportionate share of pass-through business activity. The similarities between large pass-throughs and large corporations extend to a comparison based on total assets. Table 2 shows that there are at least as many S corporations and partnerships (combined) as C corporations in each of the three size categories. In 2008, there were 39,389 pass-throughs with assets above $50 million, compared with 27,807 corporations; there were 21,056 pass-throughs with assets exceeding $100 million, compared with 20,519 corporations of the same size. As in the case of a receipt-based comparison, these figures run contrary to the general association of pass-throughs with "small business." An asset-based comparison also shows that the largest corporations are, again, much larger than the largest pass-throughs. For corporations with assets over $100 million, average assets equal nearly $3.5 billion, while the largest S corporations average assets of $361 million, and the largest partnerships average assets of $773 million. Although there are a significant number of large pass-throughs, the largest corporations are about 4.5 times larger than the average S corporation, and about 10 times larger than the average partnership. This difference between the largest corporations and pass-throughs may be partly due to corporations' access to larger capital markets with which to finance assets. Table 2 also indicates that there is a concentration of assets among a small number of firms that is similar to the concentration of receipts displayed in Table 1 . For example, 43% of S corporation assets are held by the largest 0.2% of firms, and 78% of partnership assets are held by the largest 1.1% of firms. Once again, the distribution is even more concentrated for corporations--98% of corporate assets are held by the largest 1.5% of firms. Thus, although only a small percentage of firms could be considered large for corporate tax purposes, they generate a significant amount of economic activity, and therefore possibly revenue. While the analysis above focused on the similarities between large pass-throughs and corporations, there are similarities across pass-throughs and corporations more generally. Perhaps most notable, the majority of both pass-throughs and corporations are small, when measured by assets or receipts. The same data used to construct Table 1 also show that over 95% of partnerships, S corporations, and C corporations generated receipts of less than $10 million. Similarly, the data used in Table 2 show that over 95% of S and C corporations and over 90% of partnerships have assets under $5 million. The differing tax treatment of these smaller businesses raises the same efficiency and equity concerns that are part of the impetus for the current debate. Addressing these concerns, however, would likely require a comprehensive reform of business taxation. Estimates of the number of pass-throughs that could be taxed as corporations can be made by employing the same data used to construct Table 1 and Table 2 . Because those tables define size in two ways, two different sets of estimates are presented--one based on a receipt measure of size and a second based on an asset measure of size. Industry-specific estimates are also presented. The industry-level data needed to construct such estimates for partnerships based on an asset measure of size, however, are not available. Only asset-based estimates for S corporations are presented. Table 3 displays the estimated number of partnerships and S corporations that could be subject to the corporate tax if size is measured by receipts. It is estimated that between 0.3% and 1.5% of all pass-throughs could be taxed as corporations if a receipt-based measure of size is used. In absolute terms, this corresponds to between 15,360 and 87,674 pass-throughs being subject to the corporate tax. More S corporations than partnerships would be affected, in absolute and percentage terms, because S corporations tend to be larger on average than partnerships when size is measured by receipts. Between 0.3% and 1.9% (9,757 and 62,655) of S corporations could potentially be subject to the corporate tax, compared with 0.2% to 1.1% (5,603 and 25,019) of partnerships. An asset-based measure of size produces similar estimates to those using a receipt-based measure. Table 4 shows between 0.3% and 1.0% of all pass-throughs could be subject to the corporate tax depending on the asset threshold chosen to determine "large" firms. In contrast to the receipt-based estimates, using an asset-based measure of size results in more partnerships than S corporations being affected. This is because partnerships tend to be larger (in terms of assets) than S corporations on average. Between 0.6% and 1.8% (18,180 to 57,524) of partnerships could potentially be subject to the corporate tax, compared with 0.08% to 0.4% (3,326 to 14,888) of S corporations. Table 3 and Table 4 do not accurately describe the potential of the proposed policy change to obtain one of its objectives--raise tax revenue. While the estimates above suggest that only a relatively small fraction of pass-throughs could be subject to the corporate tax, they do not show the economic significance of the firms potentially affected. The previous section, however, showed that the largest pass-throughs account for a disproportionate share of receipts, and held a disproportionate share of assets (see Table 1 and Table 2 ). Thus, while only a small number of firms may be impacted by the corporate tax, the revenue generated could potentially be significant since the affected firms would be large. It is also possible to estimate the number of firms in each industry that could potentially be subject to the corporate tax. Table 5 displays the five industries that would likely be the most affected if large pass-throughs were taxed as corporations based on their receipts. The rankings were made based on the percentage of firms in each industry that would be affected if the size threshold were $10 million in receipts. There are 18 industry classifications in total. Appendix A contains estimates for all 18 industries. Manufacturing and wholesale and retail trade would likely have the largest percentage of firms subject to the corporate tax among S corporations. It appears that over 5% of both industries would be taxed if the size threshold were set at $10 million, and just around 1% of both industries would be taxed if it were set at $50 million. Mining, transportation, and construction likely round out the top five S corporations, with about 2% being affected at the $10 million size cutoff, and 0.30% or less being taxed at a $50 million cutoff. The utilities industries would likely be most affected among partnerships, followed by manufacturing. Nearly 16% of the utilities industry could pay the corporate tax if a $10 million threshold were used. Around 8.5% of the industry could pay the tax if the size limit were increased to $50 million. With respect to manufacturing, just under of 7% could be taxed as corporations if the smaller size definition were used, and just over 2% could pay the tax if the larger $50 million threshold were chosen. Information, wholesale and retail trade, and health care appear to make up the remaining top five most affected partnership industries. Industry-level estimates of the number of firms that could be affected if an asset-based measure of size were used are presented in Table 6 . Industry estimates can only be made for S corporations, however, since industry-level data on partnership asset holdings do not exist. The rankings were made based on the percentage of firms in each industry that would be affected if the size threshold were $25 million in assets. Appendix B provide estimates for all 18 industry classifications. It is estimated that holding companies would be most affected. Between 5.1% and 9.6% of S corporation holding companies could be subject to the corporate tax depending on the asset threshold used. Manufacturing ranks second, with between 0.3% and 1.5% of S corporations in the industry potentially affected. Mining, utilities, and the finance and insurance industry appear to round out the top five. Table 6 also indicates that as the size threshold increases, the number of potentially affected firms across industries falls. For the largest size measure, the number of firms falls to less than 2% for all industries except holding companies. Lastly, comparing Table 5 and Table 6 reveals that the measure of size used matters for determining what industries will be affected the most. For example, while holding companies are estimated as the most affected if an asset-based measure of size is used, the industry does not even break the top five if a receipt-based measure of size is used. The decision about how to measure size becomes less important as the minimum size used to determine which firms would be subject to the corporate tax increases. For instance, aside from S corporation holding companies, if a $100 million asset threshold were used, no industry would see more than 0.3% of firms taxed as corporations. If a $50 million receipt threshold were used, only two industries would have more than 0.3% of firms paying the corporate tax. Congress will face a number of policy choices and considerations should it choose to tax large pass-throughs as corporations. One choice would concern the size of a pass-through that would trigger the corporate tax. This involves two steps. First, a measure of business size would need to be chosen. Two measures were used in this report--an asset-based measure and a receipt-based measure. Alternatives to these two options include a profit-based measure, an employment-based measure, a composite measure (i.e., based on assets, receipts, and employment), or industry specific measures (e.g., an asset-based measure for certain industries, and a receipt-based measure for other industries). An asset-based measure has some attractive features. Assets are likely to be more stable over the business cycle than revenues, profits, and employment. Therefore, using an asset-based measure would help to reduce uncertainty about how a business will be taxed in any given year. It may also be harder for pass-throughs to manipulate their assets to avoid being labeled as large. The most sophisticated pass-throughs may be able to shift revenue or income to subsidiaries located outside the U.S. in an attempt to avoid the corporate tax. At the same time, certain firms may still be able to strategically shift assets out of the country to avoid the corporate tax. There is some evidence that firms with extensive intangible assets (e.g., patients, copy rights, trademarks, etc.), such as those in the pharmaceutical industry, and the computer and electronic equipment industry, may be engaged in this behavior. An asset-based measure of size, however, may not accurately measure the economic size of businesses in particular industries. Certain firms and industries may be less capital intensive than others and therefore have fewer assets. For example, the manufacturing and mining industries will naturally have more assets than the health care industry, or the education industry because these two industries are more service-oriented. Particular health care and education firms could still be considered large if measured by receipts, profits, or employment, but may not be classified as such when measured by assets. An alternative to using a single measure of size would be to use a composite measure of size that is based on assets, employment, and revenue or income. Another option would be to use industry specific measures, such as an asset-based measure for the manufacturing industry, and a receipt or profit-based measure for the health care industry. In any case, if policymakers decide to use a measure based on receipts, profits, or employment, they may want to consider using an multi-year moving average since these measure may fluctuate substantially from year to year. The second step in defining "large" pass-throughs is choosing a threshold above which a pass-through would be taxed as a corporation. The Obama Administration may be considering a proposal that would define a large pass-through as one earning $50 million or more in receipts. The Administration has also considered using an industry-specific threshold to impose a financial crisis responsibility fee on large financial institutions. This threshold would be asset based and set at $50 billion, which would be suitable for indentifying large financial institutions. However, such a threshold may exclude firms in other industries that are considered large by alternative measures. One way to address this would be to employ industry-specific size thresholds. In determining the thresholds, Congress could direct the IRS to develop appropriate industry specific thresholds, or rely on methods similar to those already implemented by the Small Business Administration (SBA). Alternatively, Congress could specifically legislate the size measures and thresholds to be used to decide which pass-throughs must pay the corporate tax. Congress could also opt to exempt pass-throughs in certain industries. Again, though, economic theory generally calls for uniform tax treatment across industries, although differential tax treatment may be justified when the actions of firms in certain industries bestow benefits to or impose costs on society that are not reflected in market prices. Examples include research and development (benefit or positive spillover) and pollution (cost or negative spillover). Still, it would probably be more efficient to levy a uniform income tax and then use more precise policy tools (e.g., credits, deductions, grants, regulation, etc.) to target spillovers at the firm level. Additionally, by including all industries and thus broadening the corporate tax base as much as possible, corporate tax rates could potentially be reduced further, which may be more efficient and equitable than if certain industries were excluded. Unfortunately, economic analysis does not provide any insight into the appropriate threshold used to define large firms. Economic theory would tend to suggest that any business tax system should tax all businesses--large and small--equally. The analysis in this report, particularly Table 3 and Table 4 , however, does provide estimates of the number of firms that would be subject to the corporate tax if particular size thresholds were chosen. These figures provide policymakers with a starting point from which to construct a more formal proposal if they should choose to do so. This report used aggregate and industry-level individual tax return data to analyze how many partnerships and S corporations could be subject to the corporate tax. The analysis determined that if a receipt-based measure of size is used, then between 0.3% and 1.5% of S corporations and partnerships could be taxed as corporations depending on the definition of a "large" pass-through--either receipts exceeding $50 million or $10 million. Using an asset-based measure of size produces similar estimates. It is estimated that between 0.3% and 1.0% of pass-throughs could pay the corporate tax depending on whether a $100 million or $25 million asset threshold is used to define a "large" firm. Although estimates suggest that only a small percentage of pass-throughs could be considered large for corporate tax purposes, the affected firms are responsible for a significant amount of economic activity, indicating that the proposed policy change could potentially raise substantial revenue. This report focused on the effect of changing the tax treatment of pass-throughs from the perspective of businesses. CRS Report R42359, Who Earns Pass-Through Business Income? An Analysis of Individual Tax Return Data , by [author name scrubbed], examined the issue of pass-through taxation from the perspective of individual taxpayers. That report concluded that although the corporate tax would be levied on pass-throughs, individuals would bear the full burden of the tax since businesses are legal, not physical entities. In addition, the analysis in the report suggests that higher-income taxpayers would generally bear most of the burden from increased pass-through taxes. Appendix A. Industry-Level Estimates Using A Receipts-Based Measure of Size Appendix B. Industry-Level Estimates Using An Asset-Based Measure of Size

Several lawmakers and the Obama Administration have expressed interest in taxing large partnerships and S corporations, also known as pass-throughs, as corporations. Part of this interest appears to be related to deficit and debt concerns. Pass-throughs may be a source of revenue since they currently account for over half of all business income but generally pay no corporate tax. Additionally, there is a growing concern that the current business tax environment may be inequitable and inefficient. Today, two business that are otherwise identical except that one is a corporation and the other is a pass-through are taxed differently. This disparity could be viewed as inequitable since the companies are similarly positioned to pay taxes. Additionally, the lack of tax uniformity across business types may cause an inefficient allocation of resources if business decisions are made for tax reasons and not economic reasons. This report uses aggregate and industry-level tax data to analyze how many partnerships and S corporations could be subject to the corporate tax. It is estimated that if a receipt-based measure of size is used, then between 0.3% and 1.5% of S corporations and partnerships could be taxed as corporations depending on if a "large" pass-through is defined as one with receipts exceeding $50 million or exceeding $10 million. Using an asset-based measure of size produces similar estimates. It is estimated that between 0.3% and 1.0% of pass-throughs could pay the corporate tax depending on whether a $100 million or $25 million asset threshold is used to define a "large" firm. Although estimates suggest that only a small percentage of pass-throughs could be considered large for corporate tax purposes, this report also finds that those firms are responsible for a significant amount of economic activity, indicating that the proposed policy change could raise substantial revenue. For example, 30% of S corporation receipts are generated by the largest 0.3% of S corporations, and 41% of partnership receipts are generated by the largest 0.2% of partnerships. Similarly, the largest 0.2% of S corporations hold 43% of S corporation assets, while the largest 1.1% of partnerships hold 78% of partnership assets. Taxing large pass-throughs as corporations would also allow for lower tax rates as it would broaden the corporate tax base. Lower tax rates combined with a reduction in the tax disparity between the corporate and non-corporate sectors could improve business tax equity and the allocation of resources relative to current policy. At the same time, an alternative policy prescription that is generally more appealing to economists--integration of the corporate and individual tax systems--could also achieve these objectives. If integration is not possible, however, then reducing the tax discrepancy between large pass-throughs and corporations may be another viable alternative, depending on its design. The focus on businesses is not the only perspective when it comes to changing the tax treatment of pass-throughs. CRS Report R42359, Who Earns Pass-Through Business Income? An Analysis of Individual Tax Return Data, by [author name scrubbed], examined the issue of pass-through taxation from the perspective of individual taxpayers. That report concluded that although the corporate tax would be levied on pass-throughs, individuals would bear the full burden of the tax since businesses are legal, not physical entities. In addition, the analysis in that report suggests that higher-income taxpayers would generally bear most of the burden from increased pass-through taxes because they earn the majority of pass-through income and are limited in their ability to shift the burden to lower-income taxpayers.

The security of federal government buildings and facilities affects not only the daily operations of the federal government but also the health, well-being, and safety of federal employees and the public. Federal building and facility security is decentralized and disparate in approach, as numerous federal entities are involved and some buildings or facilities are occupied by multiple federal agencies. The federal government is tasked with securing over 446,000 buildings or facilities daily. Prior to the April 19, 1995, bombing of the Alfred P. Murrah Building in Oklahoma City, the federal government had no established approach to security for federally owned or leased facilities. Immediately following the bombing, President William J. Clinton directed the Department of Justice (DOJ) to assess the vulnerability of federal facilities to terrorist attacks or violence and to develop recommendations for minimum security standards. The U.S. Marshals Service (USMS), within DOJ, coordinated two working groups to accomplish these presidential directives. The working groups identified and evaluated various security measures and activities that could address potential vulnerabilities, and minimum security standards were proposed for federal facilities. Additionally, USMS deputies and General Services Administration (GSA) security specialists conducted inspections at more than 1,200 federal facilities to obtain security data on buildings for use in upgrading existing conditions to comply with the proposed minimum standards. The result of the working groups' efforts was the Vulnerability Assessment of Federal Facilities report. After the report was issued, President Clinton directed all executive branch agencies to begin upgrading their facilities to meet the recommended minimum security standards. Following the DOJ recommendations, President Clinton also required GSA to establish building security committees for GSA-managed facilities. The September 2001 terrorist attacks, the September 2013 Washington Navy Yard shootings, and the April 2014 Fort Hood shootings focused the federal government's attention on building security activities. This resulted in an increase in the security operations at federal facilities and more intense scrutiny of how the federal government secures and protects federal facilities, employees, and the visiting public. There has been congressional interest concerning federal facility security in past Congresses. On May 21, 2014, the House Transportation and Infrastructure Committee held a hearing on "Examining the Federal Protective Service: Are Federal Facilities Secure?" and on December 17, 2013, the Senate Homeland Security and Governmental Affairs Committee held a hearing on "The Navy Yard Tragedy: Examining Physical Security for Federal Facilities." Even though congressional interest and oversight primarily focuses on the Federal Protective Service (FPS), it should be noted that the most recent incidents at federal facilities are not facilities that are the responsibility of FPS. FPS federal facility security responsibility is limited to only 9,000 of the approximate 446,000 federal facilities. In addition to FPS, there are approximately 20 other federal law enforcement entities with federal facility security missions. Federal facility security is an issue for all branches of the government and every federal department and agency. This attention resulted in a number of frequently asked questions. This report answers several common questions regarding federal building and facility security. These questions include What is federal facility security? Who is responsible for federal facility security? Is there a national standard for federal facility security? What are the types of threats to federal facilities, employees, and the visiting public? How is threat information communicated among federal facility security stakeholders? What are the potential congressional issues associated with federal facility security? In general, federal facility security includes operations and policies that focus on reducing the exposure of the facility, employees, and the visiting public to criminal and terrorist threats. Each federal facility has unique attributes that reflect its individual security needs and the missions of the federal tenants. In 1995, USMS categorized federal facilities by security level: Level I--buildings with no more than 2,500 square feet, 10 or fewer federal employees, and limited or no public access; Level II--buildings with 2,500 to 80,000 square feet, 11 to 150 federal employees, and moderate public access; Level III--buildings with 80,000 to 150,000 square feet, 151 to 450 federal employees, and moderate to high public access; Level IV--buildings with 150,000 square feet or more, more than 450 federal employees, and a high level of public access; and Level V--buildings that are similar to Level IV but are considered critical to national security (e.g., the Pentagon). Security operations may include all-hazards risk assessments; emplacement of criminal and terrorist countermeasures, such as vehicle barriers, closed-circuit cameras, security checkpoints at entrances, and the patrolling of the grounds and perimeter of federal facilities; federal, state, and local law enforcement response; emergency and safety training programs; and proactive gathering and analysis of terrorist and criminal threat intelligence. In addition to the FPS, and according to the Department of Justice's Office of Justice Programs (OJP), there are approximately 20 federal law enforcement entities that provide facility security. The federal law enforcement entities responsible for facility security are U.S. Department of Commerce's National Institute and Standards and Technology Police--Officers provide law enforcement and security services for NIST facilities; U.S. Department of Defense's Pentagon Force Protection Agency--Officers provide law enforcement and security services for the occupants, visitors, and infrastructure of the Pentagon, Navy Annex, and other assigned Pentagon facilities; U.S. Department of Health and Human Services' National Institutes of Health, Division of Police--Officers provide law enforcement and security services for NIH facilities; U.S. Department of Homeland Security's Federal Emergency Management Agency, Security Branch--Officers are responsible for the protection of FEMA facilities, personnel, resources, and information; U.S. Department of Homeland Security's U.S. Secret Service--Uniformed Division officers protect the White House complex and other presidential offices, the main Treasury building and annex, the President and Vice President and their families, and foreign diplomatic missions; The Federal Reserve Board Police--Officers provide law enforcement and security services for Federal Reserve facilities in Washington, DC; National Aeronautics and Space Administration, Protective Services--Officers provide law enforcement and security services for NASA's 14 centers located throughout the United States; Smithsonian National Zoological Park Police--Officers provide security and law enforcement services for the Smithsonian Institution's 163-acre National Zoological Park in Washington, DC; Tennessee Valley Authority Police--Officers provide law enforcement and security services for TVA employees and properties, and users of TVA recreational facilities; U.S. Postal Inspection Services--Postal police officers provide security for postal facilities, employees, and assets, as well as escort high-value mail shipments; U.S. Department of the Interior's U.S Bureau of Reclamation, Hoover Dam Police--Officers provide security and law enforcement services for the Hoover Dam and the surrounding 22-square-mile security zone; Judiciary's U.S. Supreme Court Police--Officers provide law enforcement and security services for the Supreme Court facilities; U.S. Department of Justice's Federal Bureau of Investigation Police--FBI police officers provide law enforcement and security for FBI facilities; U.S. Department of Justice's U.S. Marshals Service--Deputy marshals provide security for federal judicial facilities and personnel; Legislative Branch's U.S. Capitol Police--Officers provide law enforcement and security services for the U.S. Capitol grounds and buildings, and in the zone immediately surrounding the Capitol complex; Legislative Branch's U.S. Government Publishing Office, Uniformed Police Branch--Officers provide law enforcement and security services for facilities where information, products, and services for the federal government are produced and distributed; U.S Department of the Treasury's Bureau of Engraving and Printing Police--Officers provide law enforcement and security services for facilities in Washington, DC, and Fort Worth, TX, where currency, securities, and other official U.S. documents are made; U.S. Department of the Treasury's United States Mint Police--Officers provide law enforcement and security services for employees, visitors, and government assets stored at U.S. Mint facilities in Philadelphia, PA; San Francisco, CA; West Point, NY; Denver, CO; Fort Knox, KY; and Washington, DC; and U.S. Department of Veterans Affairs' Veterans Health Administration, Office of Security and Law Enforcement--Officers provide law enforcement and security services for VA medical centers. Some federal law enforcement agencies, such as the Federal Protective Service, do not stand post at federal facilities, but instead train, inspect, and monitor private security guard companies that provide personnel that occupy security check points and patrol federal facilities. Additionally, FPS responds to criminal and emergency incidents. FPS is responsible for over 9,000 federal facilities and monitors over 15,000 private security guards. These 9,000 facilities are a small portion of the approximately 446,000 federal facilities, and the other 437,000 facilities may be secured by the law enforcement entities listed above; however, one may assume some of these facilities have no law enforcement presence. Due to the large number and different types of federal facilities, there is no single security standard that applies to every facility. There is, however, an interagency committee responsible for providing a number of standards that address federal facility security. The Interagency Security Committee (ISC) has the mission to "safeguard U.S. nonmilitary facilities from all hazards by developing state-of-the-art security standards in collaboration with public and private homeland security partners." GSA originally chaired the ISC until the establishment of the Department of Homeland Security (DHS). Presently, DHS chairs the ISC. Congressional enactment of the Homeland Security Act in 2002 and the creation of DHS centralized the federal government's efforts to respond to terrorism, including enhancing physical security of federal facilities. Accordingly, the chairmanship of the ISC was transferred from the GSA Administrator to DHS in March 2003. ISC membership consists of over 100 senior level executives from 53 federal agencies and departments. ISC centralizes some efforts to secure federal facilities. These federal agency and department executives, through working groups, have developed and issued the following federal facility policy and standards: Planning and Response to an Active Shooter: An Interagency Security Committee Policy and Best Practices Guide (November 2015); The Risk Management Process: An Interagency Security Committee Standard (November 2016); The Risk Management Process for Federal Facilities, Appendix A: Design-Basis Threat Report (January 2016); The Risk Management Process for Federal Facilities, Appendix B: Countermeasures (January 2016); The Risk Management Process for Federal Facilities, Appendix C: Child-Care Centers Level of Protection Template (January 2016); and Items Prohibited from Federal Facilities: An Interagency Security Committee Standard (February 2013). In addition to these standards, the ISC has issued numerous "best practices" including the following: Security Specialist Competencies: An Interagency Security Committee Guide (January 2017); Federal Mobile Workplace Security: An Interagency Security Committee White Paper (January 2017); Best Practices for Security O ffice Staffing in Federal Facilities: An Interagency Security Committee Guide (September 2016); Best Practices and Key Considerations for Enhancing Federal Facility Security and Resilience to Climate-Related Hazards (December 2015); Best Practices for Planning and Managing Physical Security Resources: An Interagency Security Committee Guide (December 2015); REAL ID Act of 2005 Implementation: An Interagency Security Committee Guide (August 2015); Facility Security Plan: An Interagency Security Committee Guide (February 2015); Presidential Policy Directive 21 Implementation: An Interagency Security Committee White Paper (February 2015); Securing Government Assets through Combined Traditional Security and Information Technology: An Interagency Security Committee White Paper (February 2015); Best Practices for Working with Lessors: An Interagency Security Committee Guide (November 2014); Best Practices for Armed Security Officers in Federal Facilities (April 2013); Violence in the Federal Workplace: A Guide for Prevention and Response (April 2013); Occupant Emergency Programs: An Interagency Security Committee Guide (March 2013); Combating Terrorism Technical Support Office, Technical Support Working Group -- Best Practices for Managing Mail Screening and Handling Processes: A Guide for the Public and Private Sectors (September 2012); and Combating Terrorism Technical Support Office, Technical Support Working Group-- Best Practices for Managing Mail Screening and Handling Processes (September 2012). Again, there is no single standard, but rather a combination of the USMS security-level designations and the ISC-developed standards and best practices. Federal facilities, employees, and the visiting public are threatened with assault, weapon and explosive possession, sexual assault, robbery, demonstrations, homicide, and arson. Physical assault by criminals and weapon (including explosives) possession appear to be the most frequent crimes committed at federal facilities. On September 16, 2013, a federal contractor shot fellow employees at the Washington Navy Yard facility. This resulted in a Department of Defense (DOD) investigation on the Navy Yard's security operations. Federal facility security is as diffuse as the number of law enforcement agencies securing them. Individual facilities secured by the same law enforcement agency may be secured in different manners based on specific security needs and threats. This makes it challenging to collect official and comprehensive data on threats to or incidents occurring at federal facilities. A brief search of media sources between 2005 and 2017 reveals approximately 67 media-reported threats or incidents. It should be noted that the following examples are not representative of the full number of threats or incidents. These threats and incidents range from bomb threats to the shooting of federal facility employees and the visiting public. Of these 67 threats or incidents, 24 were an evacuation of a federal facility due to either a "suspicious package" or a "bomb threat." Fifteen of the incidents were shooting incidents, including the Navy Yard shooting in September 2013. Other threats or incidents included a plane flying into a building with the IRS as a tenant in Austin, TX, in February 2010, and a Molotov cocktail thrown at a St. Louis, MO, federal building in April 2012. The April 2014 shooting at Fort Hood, TX, is not included in these 67 incidents. In contrast to CRS's brief survey of media-reported incidents, FPS has provided crime data to CRS that reflect threats or incidents at facilities that FPS is responsible for securing (see Table 1 ). FPS criminal data on violent crime at federal facilities reflect information that is categorized as assault, weapons and explosive possession, sexual assault, robbery, demonstrations, homicide, and arson. The numbers in this table reflect incidents categorized by FPS, and such incidents as "assault" include both verbal and physical assaults, and "sexual assaults" include both aggravated and rape. FPS only secures approximately 9,000 federal facilities of the approximately 446,000 federal facilities, and as a result, the total number of threats against and incidents at all federal facilities is likely to be much higher. One established method the federal government used to communicate threats was the Homeland Security Advisory System (HSAS), which was managed by DHS. In 2009, however, DHS's Homeland Security Advisory Council established a task force to review the HSAS and recommended changes to the administration and use of the system. Upon completion of the review, DHS replaced the HSAS with the National Terrorism Advisory System (NTAS). NTAS communicates terrorism threat information by providing "timely, detailed information to the public, government agencies, first responders, airports and other transportation hubs, and the private sector." Within DHS, the Office of Operations Coordination and Planning is responsible for monitoring the nation's security situation daily, through the National Operations Center (NOC), and coordinating activities among DHS, governors, homeland security advisors, law enforcement entities, and critical infrastructure operators. Information on domestic incident management is shared with Emergency Operations Centers at federal, state, and local levels through the Homeland Security Information System (HSIN) and state and local intelligence fusion centers. In addition to established information sharing processes, there are also ad hoc coordination and threat-specific information sharing processes. In 2005, the Deputy Assistant Director of the FBI's Counterterrorism Division testified before the House Committee on Homeland Security about the FBI's coordination with other federal agencies concerning potential nuclear threats or incidents. The Deputy Assistant Director stated that the FBI has developed liaison relationships with DHS, the Department of Energy (DOE), and DOD, and detailed how the FBI and these departments would coordinate their response efforts if there was a nuclear threat or incident. Some federal entities, in response to targeted and specific threats, have developed mechanisms for notifying other federal departments and agencies, such as the U.S. Nuclear Regulatory Commission's Office of Nuclear Security and Incident response, which coordinates with DHS, the federal intelligence and law enforcement communities, and DOE. Threat information relevant to federal facility security is communicated between federal facility security managers, federal law enforcement entities securing the facilities, and local law enforcement entities that assist the federal government. Some federal facilities, especially those located in areas without a large federal government presence, rely on state and local law enforcement entities. Congress reviews the communication of threat information because of the continued criminal and terrorist threats faced by federal facilities. How this threat information is shared among federal, state, and local government entities is an important aspect to federal facility security and is a proactive step in the risk management process. Congress may continue its oversight of federal facility security generally, and the FPS specifically. One issue the Government Accountability Office identified in a report published on May 21, 2014, was FPS's continued shortcomings in training and monitoring its contract security guards. GAO stated that FPS continued to face challenges ensuring that its contract security guards have been properly trained and certified before being deployed to federal facilities. In its December 2013 report, GAO found that FPS was challenged in providing active shooter response and screener training. As a result, GAO found that FPS had limited assurance that contract security guards at federal facilities are prepared to respond to active shooter incidents, and that contract security guards may have been using screening equipment without proper training. Additionally, GAO found that FPS and other federal agencies continued to face issues in assessing risk at federal facilities. GAO stated that its continuing study of federal facility risk assessment activities indicates that several federal agencies, including FPS, face challenges in completing and implementing the results of in-depth risk assessments. Specifically, GAO found that the Departments of the Interior and Veterans Affairs, FPS, the Federal Emergency Management Agency, and the Nuclear Regulatory Commission did not assess the threat, consequences, or vulnerability to specific events as required by ISC federal facility security standards. Also, GAO found that FPS's Modified Infrastructure Survey Tool, which it currently uses to assess risk at federal facilities, does not assess potential consequences. Another issue Congress may address is federal facility emergency plans and planning. Even though GAO found that selected federal facilities' emergency plans generally reflect federal guidance, there are still challenges that federal agencies face. These challenges include employee participation apathy, accounting of employees, and updating of employee emergency contact information during testing of emergency plans. These issues, and other potential issues, were initially prompted by the 1995 bombing of the Alfred P. Murrah building. Since then, efforts have been made to improve standards. However, incidents such as the September 2001 attacks on the Pentagon and the shootings at the U.S. Navy Yard and Fort Hood, TX, indicate that some issues remain.

The security of federal government buildings and facilities affects not only the daily operations of the federal government but also the health, well-being, and safety of federal employees and the public. Federal building and facility security is decentralized and disparate in approach, as numerous federal entities are involved and some buildings or facilities are occupied by multiple federal agencies. The federal government is tasked with securing over 446,000 buildings or facilities daily. The September 2001 terrorist attacks, the September 2013 Washington Navy Yard shootings, and the April 2014 Fort Hood shootings focused the federal government's attention on building security activities. This resulted in an increase in the security operations at federal facilities and more intense scrutiny of how the federal government secures and protects federal facilities, employees, and the visiting public. This renewed attention has generated a number of frequently asked questions. This report answers several common questions regarding federal building and facility security, including What is federal facility security? Who is responsible for federal facility security? Is there a national standard for federal facility security? What are the types of threats to federal facilities, employees, and the visiting public? How is threat information communicated among federal facility security stakeholders? What are the potential congressional issues associated with federal facility security? There has been congressional interest concerning federal facility security in past Congresses. On May 21, 2014, the House Transportation and Infrastructure Committee held a hearing on "Examining the Federal Protective Service: Are Federal Facilities Secure?" and on December 17, 2013, the Senate Homeland Security and Governmental Affairs Committee held a hearing on "The Navy Yard Tragedy: Examining Physical Security for Federal Facilities." Even though the majority of ongoing congressional interest in federal facility security has focused on the Federal Protective Service (FPS), FPS is only responsible for the security of 9,000 of the approximately 446,000 federal facilities. In addition to FPS, there are approximately 20 other federal law enforcement entities with federal facility security missions. Federal facility security is the responsibility of all branches of the government and all federal departments and agencies.

In 2001, lighting accounted for 8.8 % (101 billion kilowatt hours) of U.S. household electricity use. Incandescent lamps, which are commonly found in households, are highly inefficient sources of light because about 90% of the energy they use is lost as heat. For that reason, lighting has been one focus of efforts to increase the efficiency of household electricity consumption. Lighting manufacturers are now producing products that are significantly more energy-efficient than incandescent bulbs. Such lighting includes fluorescent bulbs. Long considered a more economical choice for commercial and industrial lighting, compact fluorescent light bulbs are becoming more attractive to household consumers. The primary difference between a compact fluorescent light bulb (CFL) and a fluorescent tube is the size. Unlike tubes, CFLs are made to fit into products that can be plugged into standard household light sockets like table lamps and ceiling fixtures. Compared to incandescent bulbs that use a heated filament to produce light, CFLs contain a gas that produces invisible ultraviolet (UV) light when the gas is excited by electricity. UV light hits a white coating inside the fluorescent bulb, which alters the light into light visible to a human eye. Because fluorescent bulbs do not use heat to create light, they are far more energy-efficient than regular incandescent bulbs. In the past, complaints about the high cost, harsh light quality, and the inability to use with a dimmer made CFLs less attractive to some consumers. However, improvements in technology have resulted in less expensive CFLs that illuminate more softly, emitting light similar to light from an incandescent bulb, that are capable of dimming. CFL sales have increased significantly in the past two years. According to the U.S. Environmental Protection Agency (EPA), 290 million Energy Star-qualified CFLs were sold in 2007. That is nearly double the number sold in 2006 (the year that CFL market share increased from a steady 5% to 11%), and represents almost 20% of the U.S. light bulb market. The primary factors contributing to the rise in popularity of CFLs are their energy efficiency and longer life. According to the Department of Energy (DOE), CFLs use about 75% less energy than standard incandescent bulbs and last up to 10 times longer. Further, according to EPA, the increase in sales is due in part to increases in consumer education and promotion by Energy Star retail partners such as Wal-Mart, Lowe's, Home Depot, Costco, Ace Hardware, and Sam's Club. Another factor that may further increase the use of CFLs is the development of energy efficiency standards for lighting. Sections 321 and 322 of the Energy Independence and Security Act of 2007 ( P.L. 110-140 , enacted December 12, 2007; referred to hereafter as the Energy Act) established energy efficiency standards for certain types of incandescent lamps, incandescent reflector lamps, and fluorescent lamps. The standards specify the maximum wattage that can be used to power lights within a range of lumens (a measure of the perceived power of light). For example, a standard North American incandescent light bulb that emits approximately 1,700 lumens uses 100 watts of power. A CFL emitting comparable lumens uses approximately 23 watts. The new standard would require incandescent lamps emitting comparable lumens to use no more than 72 watts. The deadlines for meeting the new standard fall between January 1, 2012, to January 1, 2014, depending on the range of lumens emitted by various bulbs. CFLs already meet the Energy Act's energy standard. The Energy Act has been interpreted by some as a prohibition on the sale or production of incandescent bulbs, or as a mandatory requirement to use CFLs. Neither is true. The Energy Act only establishes standards that incandescent bulbs must meet--it does not prohibit their use, nor does it mandate the use of CFLs. Mercury is a highly volatile, naturally occurring element. It conducts electricity, is liquid at room temperature, combines easily with other metals, and expands and contracts evenly with temperature change. These properties make mercury useful in a variety of household, medical, and industrial products and processes. Mercury is also a potent neurotoxin that can, at certain exposure levels, cause brain, lung, and kidney damage. Mercury is an essential component of CFLs that allows a bulb to be an efficient light source. Fluorescent bulbs, unlike many other mercury-containing consumer products, are among the few products for which non-mercury substitutes do not exist. Still, over the past 20 years, the mercury content in fluorescent tubes and bulbs has declined steadily. A CFL generally contains 2 to 6 milligrams (mg) of mercury (an amount that poses virtually no risk of harm ). By comparison, mercury has been present for decades in the following household products: watch batteries (25 mg), dental amalgams (500 mg), thermometers (500 mg to 2 grams (g)), thermostats (3 g), electrical switches and relays (3.5 g), and standard fluorescent tubes (up to 40 mg; lighting manufacturers now produce low-mercury fluorescent tubes that generally contain less than 9 mg of mercury). Increased use of CFLs has generated concern among some over the potential danger the bulbs may pose if broken in the home during use or after disposal. The amount of mercury that may be released by a CFL depends on a variety of factors, including a bulb's age at the time of disposal. As the bulb ages, the mercury content becomes bound to the glass, where it is not readily available for release into the environment unless it is burned (i.e., disposed of in an incinerator). Therefore, it is possible to essentially eliminate potential mercury releases from CFLs if they are not broken, particularly when new, or incinerated. Mercury is not released from CFLs during normal use. Consumers would be exposed to mercury only if a bulb were to break. At room temperature, some of a bulb's metallic mercury will evaporate and form mercury vapors; however, the danger posed from exposure to the amount of mercury in an individual CFL is minimal. Although the potential risk of harm associated with CFL use is relatively low, certain precautions are recommended to avoid spreading of mercury vapor. Several federal and state agencies have published cleanup and disposal recommendations for CFLs. Guidance from the different agencies varies slightly, but generally recommends the following steps: open a window and leave the room for 15 minutes, and keep pregnant women, children, and pets away from the area until it is cleaned up; gather glass fragments and powder--on hard surfaces, use stiff paper or cardboard (do not vacuum), and on carpet, pick up large pieces wearing disposable gloves; use sticky tape, such as duct tape, to pick up any remaining small glass fragments and powder; wipe the area clean with damp paper towels or disposable wet wipes; and place all waste and cleaning materials in a glass jar with a metal lid or in a sealed plastic bag, and immediately place all materials outdoors and check with local or state government about disposal requirements. In guidance provided by the Energy Star program, it has been noted that the use of CFLs in place of incandescent bulbs could actually reduce the amount of mercury emissions to the environment. Coal-fired power plants currently account for 40% of mercury emissions in the United States. During a five-year span, by some estimates, a coal-fired power plant emits 9.3 mg of mercury in the course of producing the same amount of electricity needed to power an incandescent bulb, compared to 2.3 mg of mercury emissions from a CFL over the same period. The use of CFLs in place of incandescent bulbs could also lead to comparable decreases in carbon dioxide, sulfur dioxide, and nitrogen oxide emissions--all pollutants emitted from coal-fired power plants. Any additional mercury emissions associated with CFLs could be minimized if bulbs are kept out of the waste stream (i.e., recycled rather than discarded) when spent. Products containing mercury may meet the federal regulatory definition of hazardous waste. Pursuant to the Resource Conservation and Recovery Act (RCRA), EPA has established regulations regarding the transport, treatment, storage, and disposal of hazardous wastes. However, households are essentially exempt from RCRA. This means that household hazardous waste (e.g., paint, batteries, thermostats, certain cleaning fluids, and pesticides) may be disposed of in municipal solid waste landfills or incinerators. The mercury levels in CFLs would potentially cause them to be deemed household hazardous waste. As such, EPA suggests that the bulbs not be discarded in household garbage "if better disposal options exist." EPA recommends that household consumers contact their state or local environmental regulatory agency for information about proper disposal options. If household garbage disposal is the only option, EPA recommends that certain precautions be taken. Since CFLs discarded in the trash will likely break and release mercury, EPA recommends that bulbs be put in two plastic bags and sealed before placement in outdoor trash or a protected outdoor location. Since virtually all components of a fluorescent bulb can be recycled, EPA recommends recycling as the preferred method to manage spent CFLs. The scope of programs to recycle CFLs varies from state to state. For example, a recycling program operating in Minnesota allows residents to leave CFLs at any of hundreds of retail stores across the state. A program in Indiana accepts CFLs at certain Sears stores. Also, regional groups have formed to develop recycling options. For example, the Northwest Compact Fluorescent Lamp Recycling Project is in the process of designing a pilot project to recycle CFLs in Oregon and Washington. Another possibility is that more retailers will begin to accept CFLs for proper disposal--IKEA currently accepts spent CFLs, and Home Depot has begun to accept them at stores in Canada (but, not yet in the United States). Generally, recycling is not widely available for waste products that are not generated in sufficient amounts to make it economically feasible for recyclers. It is anticipated that, as more spent CFLs enter the waste stream, recycling opportunities will increase. Further, EPA is currently working with CFL manufacturers and U.S. retailers to expand disposal options. Finally, under SS 321(h) of the Energy Act, EPA is directed to submit to Congress a report describing recommendations relating to the means by which the federal government may reduce or prevent the release of mercury during the manufacture, transport, storage, and disposal of light bulbs. A perceived danger posed by the use of CFLs has been fed, at least in part, by some media reports claiming hidden costs and dangers associated their use. These reports escalated after an incident involving a broken CFL in a home in Prospect, Maine, on March 14, 2007. After contacting various sources, the homeowner sought cleanup advice from the Maine Department of Environmental Protection (DEP). A DEP representative advised the homeowner to contact an environmental remediation company to remove any residual mercury from the home. The homeowner was given a $2,000 cleanup estimate. The Maine DEP later acknowledged that because CFLs were relatively new to the market, department personnel had been unfamiliar with proper cleanup and disposal requirements for the bulbs. The agency subsequently posted cleanup guidance on its website, along with an account titled the "History and facts on CFL breakage in Prospect, Maine." The initial incident was repeated by various media outlets, some of which exaggerated the potential danger and cost associated with CFL use and disposal. For example, one journal stated, in part, [T]here is no problem disposing of incandescents when their life is over. You can throw them in the trash can and they won't hurt the garbage collector. They won't leech deadly compounds into the air or water. They won't kill people working in the landfills. The same cannot be said about the mercury-containing CFLs. As noted previously, significantly higher levels of mercury have been present for decades in several other consumer products. There have been no reports of landfill worker fatalities related to mercury exposure. Additional elements of the incident in Maine have been widely repeated, particularly the claim that it will cost a consumer $2,000 to clean up a broken CFL at home. Even though many of the original details and claims have been refuted, the Maine incident is often cited in online news stories and Web logs, particularly when the potential dangers associated with CFLs are discussed.

Compact fluorescent light bulbs (CFLs), a smaller version of fluorescent tubes, are produced with technology that allows them to fit into standard lighting products such as lamps and ceiling fixtures. The bulbs use one-fifth to one-quarter the energy and can last 10 times longer than traditional incandescent light bulbs. These factors have led to a significant increase in the sales of CFLs. According to the U.S. Environmental Protection Agency (EPA), CFL sales doubled in 2007 and now represent 20% of the U.S. light bulb market. Sales may be expected to increase with the implementation of new energy efficiency standards for lighting specified in the Energy Independence and Security Act of 2007 (P.L. 110-140, enacted December 19, 2007). Those standards require certain light bulbs to use 25% to 30% less energy than today's products beginning in 2012. CFLs already meet the standards. The increased use of CFLs has led to concern among some groups over the presence in the bulbs of mercury, a potent neurotoxin. By way of example, EPA has likened the amount of mercury in individual bulbs to that which could fit on the tip of a ballpoint pen--ranging from 2 to 6 milligrams (mg). At these levels, mercury is virtually harmless to consumers. Still, EPA recommends that caution be taken in cleaning up broken CFLs to minimize potential mercury exposure. EPA also recommends that spent bulbs be recycled, instead of disposed of with household garbage, in areas where CFL recycling is available. (Federal regulations that apply to the disposal of mercury-containing products (e.g., lighting, switches, thermometers) do not apply to households.) Further, EPA has noted that increased CFL use may actually reduce overall mercury emissions to the environment by potentially reducing power use--coal-fired power plants are the greatest individual source of mercury emissions in the United States. This report discusses reasons why CFL sales have increased dramatically in the past two years, concerns that have arisen regarding their use and disposal, and some media reports that have exaggerated the potential danger associated with the mercury in CFLs.

Congress enacted Title VII of the Civil Rights Act of 1964 (CRA) to provide statutory protection for employees against religious discrimination by certain employers. Among other things, Title VII generally prohibits employers from discriminating against employees on the basis of their religious beliefs and requires employers to make reasonable accommodations for employees' religious practices. However, certain religious organizations may be exempt from some of the prohibitions of Title VII. Title VII is considered a model for other employment nondiscrimination legislation, and Congress may choose to incorporate protections offered by Title VII into new civil rights bills. This report analyzes the scope of Title VII's prohibition on religious discrimination, exemptions for religious organizations, and requirements for accommodations. The CRA established protections for civil rights across a wide spectrum, including, for example, education, federally funded programs, and employment. Title VII of the CRA prohibits discrimination in employment on the basis of race, color, religion, national origin, or sex. Title VII applies to employers with 15 or more employees, including the federal government and state and local governments. Individuals who believe they are victims of employment discrimination may file a complaint with the Equal Employment Opportunity Commission (EEOC), which is responsible for enforcing individual Title VII claims against private employers. The Department of Justice enforces Title VII against state and local governments but may do so only after the EEOC has conducted an initial investigation. Section 701 of Title VII defines religion to include all aspects of religious observance and practice, as well as belief, unless an employer demonstrates that he is unable to reasonably accommodate to [sic] an employee's or prospective employee's religious observance or practice without undue hardship on the conduct of the employer's business. This definition of religion forms the basis of requirements for employers under Title VII. Under the statutory definition, employers cannot use an employee's (or applicant's) religious observance or religious practice against the employee if the employer can reasonably accommodate the observance or practice without undue hardship on the business. If an employer discriminates based on a religious observance or practice that can be reasonably accommodated, the employer may be in violation of Title VII's prohibition on discrimination on the basis of religion. Sometimes whether a particular observance or practice is "religious" may be disputed. Religious practices and observances are generally considered "to include moral or ethical beliefs as to what is right and wrong which are sincerely held with the strength of traditional religious views." The belief does not need to be accepted by any religious group and does not need to be accepted by the religious group to which the individual belongs in order to qualify as religious under Title VII. Courts have upheld this understanding that a religious belief does not need to meet objective tests of reasonableness, but instead must be a sincerely held belief of the individual regardless of its broader acceptance. While Title VII and its regulations provide a broad prohibition on discrimination based on religion as it is defined alone, Section 703 of Title VII more specifically defines unlawful employment practices under the CRA. This section prohibits employers from using religion as a basis for hiring or discharging any individual. It further prohibits employers from discriminating "with respect to his compensation, terms, conditions, or privileges of employment" because of the individual's religion. It also prohibits employers from limiting or separating employees or applicants "in any way which would deprive or tend to deprive any individual of employment opportunities or otherwise adversely affect his status as an employee...." Title VII generally prohibits employers from treating employees of one religion differently from the way they treat employees of another religion. Employers cannot consider religion when scoring results of employment-related tests; cannot use religion as a motivating factor for any action, even if other factors also motivated the action; cannot retaliate against any individual who opposed an employer's action that is unlawful under Title VII or participated in the investigation of the unlawful action; and cannot publish or advertise any preference based on religion, unless that preference is based on a bona fide occupational qualification. The discrimination prohibited by Title VII includes harassment that is "sufficiently severe or pervasive to alter the conditions of [the victim's] employment and create an abusive working environment." Furthermore, an employee cannot be required to participate in any religious activity as part of his or her employment. Title VII does not apply to all employers, particularly with respect to religious discrimination. In addition to exempting employers with fewer than 15 employees, Title VII includes exceptions that allow certain employers to consider religion in employment decisions. Specifically, Title VII's prohibition against religious discrimination does not apply to "a religious corporation, association, educational institution, or society with respect to the employment [i.e., hiring and retention] of individuals of a particular religion to perform work connected with the carrying on by such corporation, association, educational institution, or society of its activities." However, the statute does not define "religious corporation, association, educational institution, or society." There is no definitive judicial standard to determine whether an organization qualifies for the exemption. In an example of the varied understanding of the scope of the exemption, a three-judge panel from the U.S. Court of Appeals for the 9 th Circuit issued three opinions, each applying a different standard. The court later amended its decision and issued a majority opinion adopting four criteria that a religious organization must satisfy to qualify for the exemption. The court's standard requires that an entity is not subject to Title VII "if it is organized for a religious purpose, is engaged primarily in carrying out that religious purpose, holds itself out to the public as an entity for carrying out that religious purpose, and does not engage primarily or substantially in the exchange of goods or services for money beyond nominal amounts." The Supreme Court declined to review the case, leaving lower courts without a uniform standard to apply. However, lower court decisions generally have appeared to agree upon several factors relevant to deciding whether an organization qualifies for the exemption. Courts have considered (1) the purpose or mission of the organization; (2) the ownership, affiliation, or source of financial support of the organization; (3) requirements placed upon staff and members of the organization (faculty and students if the organization is a school); and (4) the extent of religious practices in or the religious nature of products and services offered by the organization. Title VII also provides two more specific exemptions. One separate, but similar, exemption applies specifically to religious educational institutions. That exemption allows such institutions "to hire and employ employees of a particular religion if [the institution] is, in whole or in substantial part, owned, supported, controlled, or managed by a particular religion or by a particular [organization], or if the curriculum of [the institution] is directed toward the propagation of a particular religion." The other exemption provided in Title VII allows employers to discriminate on the basis of religion, sex, or national origin if those factors are "a bona fide occupational qualification reasonably necessary to the normal operation of that particular business or enterprise." This exemption based on bona fide occupational qualifications has been construed narrowly. Accordingly, courts have deemed valid discriminatory qualifications to arise only in situations where religion plays an extremely significant part of the work environment, including, for example, jobs where employee safety is threatened because of the employee's religious affiliation. Exemptions for religious organizations in the context of Title VII are not absolute. Once an organization qualifies as an entity eligible for Title VII exemption, it is permitted to discriminate on the basis of religion in its employment decisions. However, the exemption does not allow qualifying organizations to discriminate on any other basis forbidden by Title VII. Thus, although a religious organization may consider an employee or applicant's religion without violating Title VII, the organization may still violate Title VII if it considers the individual's race, color, national origin, or sex. Furthermore, the exemptions in Title VII appear to apply only with respect to employment decisions regarding hiring and firing of employees based on religion. Once an organization makes a decision to employ an individual, the organization may not discriminate on the basis of religion regarding the terms and conditions of employment, including compensation, benefits, privileges, etc. In other words, religious organizations that decide to hire individuals with other religious beliefs cannot later choose to discriminate against those individuals with regard to wages or other benefits that the organization provides to employees. It is important to note one more exemption relevant to Title VII's prohibition on employment discrimination. The First Amendment of the U.S. Constitution protects religious organizations' right to choose spiritual leaders. Even before Title VII granted a statutory exemption to religious organizations' hiring decisions generally, the U.S. Supreme Court recognized that the "freedom to select the clergy" has "federal constitutional protection as part of the free exercise of religion against state interference." Title VII's nondiscrimination requirements (e.g., prohibitions on discrimination based on sex) may interfere with this constitutional freedom specific to clergy. This constitutional "ministerial exception" reconciles Title VII with the First Amendment by allowing religious organizations to select clergy without regard to any of Title VII's restrictions yet requiring that employment decisions made regarding other positions within the organization comply with Title VII's requirements or exemptions. Prior to the Supreme Court's recognition of the ministerial exception in 2012, each of the circuit courts also recognized the exception. However, the circuit courts differed on the scope of the exemption, particularly which employees qualified as ministerial employees. The Supreme Court declined to "adopt a rigid formula for deciding when an employee qualifies as a minister," deciding only the status of the employee in the case before it. Although the Court did not identify a definitive standard, it considered four factors that may be relevant to determining whether an employee is ministerial: (1) the formal title given to the employee by the religious institution; (2) the substantive actions reflected by the title (i.e., the qualifications required to be granted such a title); (3) the employee's understanding and use of the title; and (4) the important religious functions performed by employees holding that title. Under Title VII, employers are prohibited from acting on the basis of employees' observances and practices only if they can be reasonably accommodated without undue hardship on the employer's business. In other words, the employer may discriminate on the basis of observances and practices that cannot be reasonably accommodated without undue hardship. EEOC regulations provide guidelines for what constitutes reasonable accommodation and undue hardship. Once an employee requests religious accommodation, the employer must consider whether the requested accommodation is reasonable or what reasonable alternatives might be provided. If more than one accommodation is possible without causing undue hardship, the EEOC determines the reasonableness of the chosen accommodation by examining the alternatives considered by the employer and the alternatives actually offered to the employee. If more than one manner of accommodation would not cause undue hardship, "the employer ... must offer the alternative which least disadvantages the individual with respect to his or her employment opportunities." Employee requests for accommodation arise most often because religious practices conflict with work schedules. EEOC guidelines suggest three possible accommodation alternatives in such situations. First, the employer may permit a voluntary substitute policy under which employees can find substitutes to cover their tasks during the conflict. Second, employers may create a flexible work schedule, including flexible arrival and departure times, floating holidays, flexible breaks, use of lunch time for early departure, and staggered work hours. Third, the employer may consider a lateral transfer for individuals whose religious practices cannot be accommodated in their current position. Another common scenario in which employees request accommodations arises under a provision in collective bargaining agreements requiring employees to join a labor organization or pay an amount equivalent to dues to that organization. When an employee objects to this requirement on religious grounds, the EEOC recommends that the organization make an exception for that employee or allow the employee to donate the equivalent of the amount due to a charitable organization. Requests for accommodation may also arise when an employee's religious beliefs conflict with a work requirement, such as performing abortions, treating gay patients, or complying with dress codes. In order for these accommodations to be appropriate under Title VII, they must not cause undue hardship to the employer. Employers cannot claim undue hardship on "a mere assumption that many more people ... may also need accommodation." The regulations provide two general bases that may justify undue hardship: cost and seniority rights. An employer may refuse to accommodate an employee's religious practice if "the accommodation would require more than a de minimis cost." The EEOC determines whether an accommodation exceeds a de minimis cost by evaluating the cost incurred to the particular employer and the number of employees that will need the accommodation. Generally, administrative costs of rescheduling are considered de minimis costs. An employer may also refuse to accommodate because the accommodation would interfere with the preference guaranteed by a seniority system. Because seniority systems create "a neutral way of minimizing the number of occasions when an employee must work on a day that he would prefer to have off," Title VII does not require that seniority systems "must give way when necessary to accommodate religious observances."

Title VII of the Civil Rights Act of 1964 prohibits discrimination in employment on the basis of race, color, religion, national origin, or sex. It prohibits employers from discriminating against employees on the basis of their religious beliefs and requires employers to make reasonable accommodations for employees' religious practices. Title VII defines religion broadly and relies on an individual's subjective understanding of his or her beliefs, which may result in broad protections for employees with sincerely held beliefs. Congress has recognized that restrictions on employment decisions by religious employers may interfere with the employer's religious practice. As a result, Title VII includes exemptions for religious entities, allowing qualifying employers to consider religion in hiring decisions. Such an exemption allows the religious organization to hire individuals who share the same beliefs as the employer. However, Congress did not define which organizations would qualify for exemption from Title VII and courts have not established a definitive standard. If an organization does qualify for exemption and therefore is allowed to consider religion in employment decisions, it is not permitted to base employment decisions on other prohibited factors under Title VII. In addition to prohibiting discrimination in employment decisions, Title VII requires employers to make reasonable accommodations for current employees' religious practices. Reasonable accommodations may include scheduling adjustments or reassignment to other comparable positions that would not interfere with the employee's religious exercise. The employer is not required to make such an accommodation, however, if doing so would pose an undue hardship on the employer's business or operations. This report reviews the scope of Title VII's prohibition on religious discrimination and its exemptions for religious organizations. It analyzes which organizations may qualify for exemption and also explains the related constitutional protection known as the ministerial exception that often arises in the context of Title VII claims. Finally, the report examines Title VII's accommodations requirement, noting what accommodations may be required and which may be declined as an undue hardship to the employer.

Hydraulic fracturing is a technique used to recover oil and natural gas from underground low permeability rock formations. Hydraulic fracturing involves pumping fluids (primarily water and a small portion of chemicals, along with sand or other proppant) under high pressure into rock formations to crack them and allow the resources inside to flow to a production well. The technique has been the subject of controversy because of the potential effects that hydraulic fracturing and related oil and gas production activities may have on the environment and health. The National Environmental Policy Act (NEPA) requires federal agencies to consider the potential environmental consequences of the actions they propose to take but does not compel agencies to choose a particular course of action. Under NEPA and its implementing regulations issued by the Council on Environmental Quality (CEQ), actions taken by a federal agency may fall into one of three categories for the purposes of environmental review. Actions that fit within a categorical exclusion (CE) undergo a relatively low level of review because these are actions that an agency has found do not have a significant effect on the environment. An environmental assessment (EA) provides a more comprehensive level of review and may be prepared when an agency wishes to determine whether an action requires the preparation of an environmental impact statement (EIS). An EIS is the most comprehensive NEPA document; it requires, among other things, that the agency explain how the proposed action will affect the environment; what unavoidable adverse environmental effects will result; and what alternatives to the proposed action exist. This report provides an overview of three situations in which parties have argued that agencies do not need to conduct a comprehensive environmental review of hydraulic fracturing under NEPA. Oil and gas companies have shown increased interest in drilling in the Monterey Shale in Central California. The shale formation has been estimated to contain billions of barrels of oil, most of which may be economically recovered only through the use of hydraulic fracturing and horizontal drilling. In 2011, the Bureau of Land Management (BLM) sold leases in four parcels, which accounted for about 2,700 acres of public land, to private parties. The Center for Biological Diversity and the Sierra Club sued BLM, claiming that the agency had violated the Administrative Procedure Act (APA) and NEPA when it prepared an EA and a Finding of No Significant Impact (FONSI) instead of an EIS for the proposed lease sale. BLM's EA for the proposed lease sale was based on a Proposed Resource Management Plan and Final Environmental Impact Statement (PRMP/FEIS) that the agency's Hollister Field Office (HFO) had prepared in 2006 for the Southern Mountain Diablo Range and the Central Coast of California, which included the leased land. The PRMP/FEIS relied on historical data showing a low amount of oil and gas development in the region and noted the limited amount of federal lands in areas of high development potential. It estimated that no more than 15 wells would be drilled on the land overseen by the HFO in the next 15-20 years. It did not discuss hydraulic fracturing. In June 2011, BLM prepared a 125-page EA for the proposed lease sale based in part on the PRMP/FEIS. During the public comment period for the EA, several parties expressed concerns about the potential environmental effects of hydraulic fracturing. However, BLM declined to analyze these impacts because, in its view, they were "not under the authority or within the jurisdiction of the BLM." After issuing a FONSI, BLM proceeded with the auction. Under CEQ regulations, whether a major federal action significantly affects the quality of the human environment depends on the context and intensity of the action. The district court examined the 10 factors for determining intensity under CEQ regulations and identified three of the intensity factors that it believed required the preparation of an EIS. According to the court, these were (1) hydraulic fracturing is highly controversial because of its potential effects on health and the environment; (2) the proposed lease sale would affect public health and safety because of the risk of water pollution; and (3) the environmental impacts of hydraulic fracturing are uncertain. In March 2013, the district court held that the BLM NEPA review was "erroneous as a matter of law." The court held that BLM unreasonably relied on an environmental analysis that (1) assumed only one exploratory well would be drilled on the leased acres when it was reasonably foreseeable that more wells would be drilled, and (2) did not contain a detailed assessment of the environmental impacts of hydraulic fracturing and horizontal drilling. The court asked the parties to meet and confer about an appropriate remedy for the agency's NEPA and APA violations and submit it to the court. In May 2011, New York Attorney General Eric Schneiderman brought a federal lawsuit on behalf of the state of New York alleging that five federal agencies and their officers were in violation of NEPA. In November 2011, the complaint was amended to add the Delaware River Basin Commission (DRBC) and its executive director as defendants. The plaintiffs asked the court to compel the defendants to prepare an EIS "before proceeding to adopt federal regulations to be administered by the DRBC that would authorize natural gas development within the Delaware River Basin." New York alleged that the refusal of the five federal agencies that are represented by the DRBC's federal member to prepare an EIS was not in accordance with law and was arbitrary, capricious, and an abuse of discretion under the APA. Because it appears that the Delaware River Basin Compact exempts the DRBC from compliance with the APA, New York argued that the DRBC's refusal to prepare an EIS was subject to judicial review under the compact itself. The Delaware River Basin Compact is an agreement among the federal government, Delaware, New Jersey, New York, and Pennsylvania. The compact creates the DRBC and grants it certain powers to manage the water resources of the basin. The commission's membership is composed of five voting members: one member from each of the four states and one representative of the federal agencies. The federal commissioner of the DRBC is appointed by the President of the United States and serves "at the pleasure of the President." NEPA states, "The Congress authorizes and directs that, to the fullest extent possible: ... all agencies of the Federal Government shall ... include in every recommendation or report on proposals for legislation and other major Federal actions significantly affecting the quality of the human environment" an EIS. Under CEQ regulations, federal agency refers, in relevant part, to "all agencies of the Federal Government. It does not mean the Congress, the Judiciary, or the President, including the performance of staff functions for the President in his Executive Office." The regulations define a major Federal action as one that has "effects that may be major and which are potentially subject to Federal control and responsibility." The regulations list typical categories for federal actions that include the approval of "specific projects, such as construction or management activities located in a defined geographic area. Projects include actions approved by permit or other regulatory decision as well as federal and federally assisted activities." New York alleged that the approval of the DRBC regulations was a major federal action requiring at least one of the defendants to prepare an EIS. The state alleged that the DRBC was a federal agency for purposes of NEPA for several reasons. These included that the language in the compact suggests that the DRBC is a federal agency; DRBC rules have been published in the Code of Federal Regulations; and the CEQ allegedly considers the DRBC to be a federal agency for purposes of NEPA. The complaint stated that the approval of the DRBC regulations amounted to a federal action requiring an EIS for two reasons. First, the complaint maintained that it was a federal action because it was a project approved by the DRBC, which New York asserted was a federal agency for purposes of NEPA. Additionally, the complaint alleged that approval of the regulations was a federal action because federal agencies "play a significant role in conducting, approving, and implementing the Action." The complaint argued that under CEQ regulations, when multiple federal agencies have authority over a major federal action that significantly affects the environment, at least one of the agencies must prepare an EIS for the action. New York claimed NEPA was violated because the five federal agencies and the DRBC had not prepared an EIS. In the 1970s, the DRBC complied with NEPA by publishing procedures implementing the statute in the Federal Register . In 1980, the DRBC stated that it would no longer prepare NEPA documents for projects in the basin, citing a lack of funding. The agency deleted its NEPA procedures in 1997. The federal defendants moved to dismiss the lawsuit on the grounds that the court lacked subject matter jurisdiction over the plaintiff's claims. The federal defendants argued that (1) the complaint was precluded by the sovereign immunity of the United States from suit; (2) New York lacked Article III standing to sue; and (3) the plaintiff's claims were not ripe for judicial review. In addition to these procedural arguments, the federal defendants maintained that NEPA did not apply because the DRBC's development of proposed regulations was not a "major federal action." The federal defendants argued that no federal action existed because, in their view, the DRBC was not a federal agency. In addition, the federal defendants argued that they did not exercise enough decision-making power, authority, or control over the DRBC's development of the proposed regulations to render it a federal action. In September 2012, the United States District Court for the Eastern District of New York granted the defendants' motions to dismiss New York's complaint for lack of subject matter jurisdiction. The court held that it lacked subject matter jurisdiction for two reasons. First, the court held that New York lacked standing because it could not show an immediate threat of injury to its interests from the proposed regulations. Alternatively, the court held that it lacked subject matter jurisdiction because New York's complaint was not ripe for review. This was because (1) the case was not fit for judicial review because it was speculative that final regulations would be issued authorizing natural gas development in areas that would affect New York; and (2) delay in considering the claim would not impose hardship on the parties because the proposed regulations did not affect the legal rights or obligations of New York, in part because of an existing moratorium on natural gas development in the Delaware River Basin. Because the court dismissed the plaintiffs' complaint on procedural grounds, it did not reach the merits of the plaintiffs' claims. However, because the court dismissed the suit without prejudice, the plaintiffs may file it again in the future if final regulations are adopted. As part of its housing program, the U.S. Department of Agriculture (USDA) Rural Development agency lends money to qualifying borrowers for the purchase of single-family homes. Some of these homes are located on properties where hydraulic fracturing may occur because the mineral rights have been leased to oil and gas companies for drilling. Rural Development has issued an administrative notice stating that the existence of drilling leases on a property will not prevent the agency from using a categorical exclusion (CE) to exempt these loans from further NEPA review, at least in ordinary circumstances. CEQ regulations define a "categorical exclusion" as "a category of actions which do not individually or cumulatively have a significant effect on the human environment.... Any procedures under this section shall provide for extraordinary circumstances in which a normally excluded action may have a significant environmental effect." The guidelines that govern Rural Development's compliance with NEPA are found in its environmental program in RD Instruction 1940-G. In this guidance, the agency has provided a list of CEs that it may use to exempt an agency action from more detailed NEPA review. This list contains actions that the agency has concluded do not "have a significant impact on the quality of the human environment, either individually or cumulatively," and thus do not require the preparation of an EIS or EA. Among the actions that may be excluded is the "provision of financial assistance for the purchase of a single family dwelling or a multi-family project serving no more than four families, i.e. units." As required by CEQ regulations, Rural Development has also promulgated a list of extraordinary circumstances in which an action that would otherwise qualify for a CE may have to undergo further NEPA review because the action may have a significant environmental effect. These circumstances may be present when actions "would be located within, or in other cases, potentially affect" certain wetlands; wild or scenic rivers; critical habitats or endangered/threatened species; sole source aquifer recharge areas; and state water quality standards, among other natural or historical resources. Rural Development uses Form RD 1940-22 when it documents its use of a CE. The form provides a checklist with a column of land uses and environmental resources on the left side. The preparer must indicate whether each of these uses or resources is "present within the site(s) of the proposed action," within the action's "area of environmental impact," or is "affected by the proposed action." Completion of the checklist determines whether extraordinary circumstances exist, and thus whether a CE may be used. At the bottom of the form, the preparer must certify that [t]his proposal meets, in terms of its size and components, the criteria for a categorical exclusion as defined in Section 1940.310 and 1940.317. As indicated in [the checklist above], the proposal does not affect any important land uses or environmental resources that would subject it to disqualification as a categorical exclusion. Finally, the proposal is neither a phase nor segment of a project which when viewed in its entirety would not meet the requirements of a categorical exclusion per Section 1940.317 (d). On March 18, 2012, a news article appeared suggesting that Rural Development was reconsidering the use of a CE for loans made for the purchase of homes on properties leased for drilling. The article stated that the agency might subject these loans to more detailed NEPA environmental review in part because of the potential environmental impact of hydraulic fracturing on properties with drilling leases. However, on March 21, 2012, Rural Development issued an administrative notice stating that it would continue to use a CE for the provision of "financial assistance for the purchase of a single family dwelling" on properties with drilling leases. The notice stated that "[t]he presence of gas leases on a property alone does not constitute any of the special circumstances listed in [RD Instruction 1940.310, which refers to 1940.317,] or the policy considerations contained in RD Instructions 1940.303 through 1940.305." In other words, according to Rural Development, loans made to facilitate the purchase of homes on properties leased for drilling may continue to fit within a CE. Additionally, it appears that the agency does not consider the existence of drilling leases on a property alone to implicate any of the extraordinary circumstances that would prevent the use of a CE as listed in Sections 310 or 317 of the agency's environmental program. Hydraulic fracturing has been controversial for its potential effects on the environment. NEPA requires federal agencies to consider the environmental consequences of the actions they propose to take by preparing a NEPA document. In at least three situations, it has been unclear whether agencies have to prepare an EA or EIS because it is not certain whether NEPA's threshold requirements are satisfied. In March 2013, a federal district court in California held that BLM had violated NEPA and the APA when it prepared an EA and FONSI for a lease sale in the Monterey Shale. The court held that BLM could not rely on an environmental analysis that (1) assumed that only one exploratory well would be drilled on the leased acres, and (2) did not contain a detailed assessment of the impact of hydraulic fracturing on the environment. The state of New York brought a lawsuit against the DRBC and five federal agencies, arguing that they were required to prepare an EIS before approving natural gas development in the Delaware River Basin. The defendants argued that the approval of the regulations was not a federal action requiring an EIS because the DRBC was not a federal agency. They also argued that the participation of a federal member on the five-member DRBC did not make the approval of the regulations a federal action. In September 2012, a federal district court dismissed the lawsuit for lack of subject matter jurisdiction. The USDA Rural Development agency has stated that it will continue to use a CE to exempt its home loans from further NEPA review, even if they are made for the purchase of homes on properties leased for drilling. The agency does not consider gas leases on properties by themselves to be extraordinary circumstances requiring further environmental review. It appears that courts and agencies have developed various viewpoints about the legal necessity of conducting NEPA environmental reviews for hydraulic fracturing, as well as the proper extent of such reviews. Additional clarification on these points may occur once courts and agencies have rendered more decisions in these areas.

Hydraulic fracturing is a technique used to recover oil and natural gas from underground low permeability rock formations. This process involves pumping fluids under high pressure into the formations to crack them, releasing oil and gas into the well. The technique has been the subject of controversy due to some of its potential effects on the environment. The National Environmental Policy Act (NEPA) requires federal agencies to consider the potential environmental consequences of the actions they propose to take by preparing one of three NEPA documents. Actions that fit within a categorical exclusion (CE) undergo a relatively low level of review because these are actions that an agency has found do not have a significant effect on the environment. A CE may not be used when extraordinary circumstances occur. An environmental assessment (EA) provides a more comprehensive level of review and may be prepared when an agency wishes to determine whether an action requires the preparation of an environmental impact statement (EIS). An EIS is the most comprehensive NEPA document; it requires, among other things, that the agency explain how the proposed action will affect the environment; what unavoidable adverse effects will result; and what alternatives to the proposed action exist. This report provides an overview of three situations in which parties have argued that agencies do not need to conduct a comprehensive environmental review of hydraulic fracturing under NEPA. In March 2013, a federal district court in California held that the Bureau of Land Management (BLM) had violated NEPA and the Administrative Procedure Act (APA) when it prepared an EA and Finding of No Significant Impact (FONSI) for a lease sale in the Monterey Shale. The court held that BLM could not rely on an analysis that (1) assumed that only one exploratory well would be drilled on the leased acres, and (2) did not contain a detailed assessment of the impact of hydraulic fracturing and horizontal drilling on the environment. In 2011, New York Attorney General Eric Schneiderman filed a complaint on behalf of the state of New York alleging that the Delaware River Basin Commission (DRBC) and five federal agencies were in violation of NEPA. New York sought an injunction compelling the defendants to prepare an EIS before the defendants adopted regulations that would allow natural gas development in the basin. In September 2012, the United States District Court for the Eastern District of New York granted the defendants' motions to dismiss New York's complaint for lack of subject matter jurisdiction. On March 21, 2012, the U.S. Department of Agriculture Rural Development agency reaffirmed its use of a CE to exempt from further NEPA review the loans it makes for the purchase of single-family homes on properties leased for drilling. The agency stated that, by itself, the existence of a drilling lease on a property is not an extraordinary circumstance that will prevent the agency from using a CE for a loan.

The National Defense Authorization Act for FY1996 called on the Department of Defense (DOD) to embark upon an initiative to develop cruise missile defense (CMD) programs emphasizing operational efficiency and affordability. Advanced cruise missiles (CMs)--those designed with stealthy capabilities to evade detection--were noted as a prominent threat prompting the need for effective CMD. This CMD initiative was to be coordinated with other air defense efforts; that is, with "cruise missile defense programs ... and ballistic missile defense programs ... mutually supporting" each other. Three years later, in conjunction with the National Defense Authorization Act for FY1999, the Senate Armed Services Committee noted: "[T]he committee does not believe that the Department of Defense has adequately integrated its various cruise missile defense programs into a coherent architecture and development plan." DOD has indicated a commitment to developing CMD capabilities--within its larger strategy of air defense requirements--that demonstrate operational effectiveness. Unlike past approaches to CMD that critics assert were "stovepiped"--individually driven by the Services' respective objectives--current and future programs are meant to emphasize effectiveness based on inter-Service synergy, or jointness. Whether or not the Pentagon will be able to integrate CMD plans to a point of effective interoperability is an important question. Many analysts believe that no mission area will rely more on jointness than detection and intercept of advanced CMs. An examination of CMD development, therefore, offers some insight into the progress DOD is making in terms of increased joint warfighting capability. CMD today is primarily an issue of force protection for U.S. troops deployed in a theater of conflict. The CM threat to the United States appears lower than the theater CM threat, but it also seems likely to grow. Given ongoing proliferation challenges, there is general consensus that CM technology will continue to spread. Many claim that the United States' dominance of manned military aviation will drive many countries to adopt CMs as the "poor man's air force." By 2015, the CIA estimates that up to two dozen nations will be able to pose a serious CM threat--primarily in theater but also through forward-deployed weapons platforms. Also, the U.S. failure to detect several Iraqi CMs launched against American assets during Operation Iraqi Freedom has led some in DOD to now deem CMD a "critical mission area." CMs present many operational challenges. Effective CMD requires rapid and accurate performance of a series of military tasks collectively known as the "kill chain." First, surveillance radars must detect manned and unmanned aircraft; including CMs. The second major step involves continuously tracking the aircraft along its course, a process complicated by what may be an elusive flight path. Next, the aircraft must be identified. It must be concretely determined whether the airborne object is a CM, or a friendly or neutral aircraft. This process, called combat identification, is vital to lowering the chances that a friendly or neutral aircraft might be erroneously identified as a threat, and attacked--a scenario that unfortunately played out several times during Operation Iraqi Freedom. Once a CM threat is identified, a decision on how to engage the CM must be made: Which defense assets--naval, ground, or airborne platforms--will be used to try to intercept the CM? The final step of the kill chain involves actually intercepting or neutralizing the CM with weapons--missiles and gunfire being the only two current options. Other technologies, such as directed energy weapons, are being studied. The U.S. military has historically fielded Service-oriented CMD systems--independent land-, air-, and sea-based weapons platforms with CMD applications. Although this strategy has yielded fairly effective point defense capabilities against conventional airborne threats, most analysts agree that an advanced CM threat will require more effective defenses. The North American Aerospace Defense Command (NORAD), for example, is attempting to augment its sensor coverage capabilities, and link with Service weapons systems for target engagement of low flying CMs. Efforts are also underway to marry military sensors and radars employed by the Federal Aviation Administration (FAA) to provide comprehensive air surveillance of the United States. Increased effectiveness against advanced CMs will require improved joint surveillance, tracking and combat identification capabilities, and increased weapons range. The Pentagon's efforts to improve CMD capabilities are addressed through multiple offices and strategies. Some of the most prominent ones are described below. JTAMDO was established in 1997 to ensure the coordination of CMD and ballistic missile defense programs as well as to integrate DOD's theater air and missile defense requirements. As a result of restructuring under the Unified Command Plan of 2002, U.S. Strategic Command (STRATCOM) took responsibility of global missile defense and JTAMDO was tasked with a support role to STRATCOM. JTAMDO's current mission is to develop joint capabilities and structures for an air and missile defense family of systems. JTAMDO's current activities also include force protection, homeland air security, assessing ballistic missile defense architectures, and chemical, biological, radiological, and nuclear defense requirements. SIAP Joint Program Office (JPO) is tasked with leading efforts to develop a SIAP--the integration of the Services' air defense technologies into a total, shared environmental awareness. Presently, the platforms of any one Service are only able to provide a partial picture of the total threat environment. A SIAP is intended to detect and continuously track all airborne objects and ensure that all allies within a theater have the same tracking data. Within a theater, where a myriad of assets--friendly, hostile, and neutral--may be concurrently airborne, a SIAP would be central to timely decision-making regarding threat responses. The level of awareness offered by a SIAP will be most dependent upon newer data linkages, and the ability to track every object with one clear signature. SIAP JPO has conducted technical assessments to develop an integrated architecture for data sharing. The technology is primarily aimed at accelerating the interoperability of those systems designed for airborne threat detection and those designed for intercept--commonly known as the "sensor to shooter" linkage. JSSEO projects fielding this technology in September 2005. It estimates SIAP development costs to be around $160 million from FY2004 to FY2009, and the Services will need to spend $600 million to incorporate SIAP technology into their existing weapons platforms. DOD hopes for a SAIP initial operational capability (IOC) by 2012. JCIET was deactivated in February 2005. When active, JCIET assessed issues associated with combat identification and finding doctrinal, technological, and procedural solutions to reduce the incidence of fratricide. JCIET coordinated joint exercises in which multiple Service platforms are tested for performance in detection, tracking, and identification of airborne threats--CMs being among them. The data collection and evaluation from these exercises aids in determining how to address the advanced CM threat. JCIET efforts aided combat identification capabilities and can therefore contribute to a clearer air picture. IFC attempts to decouple Service-specific and platform-specific fire control radars from their weapons to create over-the-horizon and joint CMD intercept capabilities. Presently, fire control radars control specific weapons. The Navy, for example, can intercept a CM with a surface-to-air missile guided by the ship's Aegis radar. A Patriot missile can intercept CMs based on its radar's information, and an F-15's radar would guide its air-to-air missiles to intercept a CM. IFC would enable an airborne surveillance platform such as an E-2C Hawkeye, E-3 AWACS, or the Joint Land Attack Cruise Missile Defense Elevated Netted Sensor (JLENS) to relay CM tracking information to either ground- or air-based assets for engagement. Furthermore, once ground-based weapons, for example, have been sent to intercept the CM, radars external to the launch platform will be able to direct the weapons towards the CM. These objectives of IFC would remove the horizon or line-of-sight limitations that currently exist for CMD, thus increasing the time and distance for intercept. Decoupling the fire control radar from the weapon could improve capabilities against stealthy CMs by providing numerous and supporting surveillance perspectives. Combined with the goals of a single integrated air picture, IFC would create a much wider and more defensible area of coverage against advanced CMs. IFC efforts for missile defense are now being undertaken within the Army's Integrated Fire Control Product Office and the Navy's IFC counter air program office. Generally at issue is whether or not DOD has adequately responded to congressional directives on CMD. This question is best addressed by examining the three main parts of the 1996 congressional CMD initiative: a suitable coordination of CMD with ballistic missile defense (BMD) efforts, the development of CMD for near-term as well as advanced CM threats, and affordability and operational effectiveness for all CMD efforts. Congress directed DOD to undertake BMD and CMD efforts in a mutually supportive fashion. Some argue that Pentagon efforts on CMD have taken a back seat to BMD efforts. In terms of resource allocation, much more focus has been placed on ballistic missile defense than on CMD. In its budget request for FY2005, for example, DOD sought $9.2 billion for the Missile Defense Agency--the office tasked with BMD--and asked for $239 million toward the development of CMD. On the one hand, it can be argued that BMD must remain paramount given the known ballistic missile threat--nuclear missiles are already targeted at the United States and enemy ballistic missiles have already taken a toll on U.S. troops during wartime. On the other hand, some contend that the current level of prioritization may be too lopsided. As noted by the Defense Science Board, the CM threat is highly unpredictable and advanced CMs could emerge quickly and unexpectedly. In relation to the congressional directive to address near-term and future airborne threats, DOD has stressed effective theater and air missile defense as a prime objective. In addition to upgrading many of the Services' individual CMD weapons platforms, DOD is working toward many of the strategies relevant to future CMD--a single integrated air picture, better combat identification, and integrated fire control among them. DOD anticipates that such building blocks will enable the employment of a joint engagement zone (JEZ) for theater war fighting between 2015 and 2020. Currently, theater commanders try to reduce the chance of fratricide by separating CMD forces into distinct zones: missile engagement zones and fighter engagement zones. This separation, however, also reduces effectiveness. A JEZ is intended to enable interoperability among the Services' sensors and weapons systems for offensive and defensive operations. Will the CMD challenges inherent to creating a JEZ really be overcome by 2010? To do so would require adequate investments of time and effort by the Pentagon. However, JTAMDO, for example, estimates that as little as 20% of its time and manpower is currently going toward CMD efforts. At the same time, it estimates that upwards of 40% of its resources are being put toward support of the initial defensive operations of BMD. Moreover, JTAMDO resources are being expended toward homeland air security coordination, force protection, and WMD defense requirements. Although some measure of action toward addressing the CM threat is being taken, the level of urgency remains an issue--as DOD may now deem other defense activities more pressing. Congress noted that CMD measures should be undertaken with operational effectiveness as a core criterion. Since interoperability of resources remains the paramount feature in the Pentagon's activities to develop effective CMD, consequences associated with jointness are a key factor to monitor. Further, several CMD objectives will likely enable other mission areas. An effective SIAP, for example, not only will offer CMD applications but also will enable counter-air operations and battlefield interdiction efforts. Increased jointness associated with CMD efforts may also create some level of organizational friction, and Congress may come under pressure to provide oversight to resolve Service "turf battles." As CMD efforts become more integrated, Service control over traditionally clear boundaries may get cloudier. With enhanced IFC, for example, Air Force or Navy assets may be able to direct ground-based weapons that are currently under Army control. It is possible that narrow Service interests may hinder the implementation of--and thus effectiveness of--future joint CMD capabilities. Moreover, will the Services' CMD operational overlap lead to a reorganization of which Services control--and are funded by Congress for--certain weapons systems and programs? The congressional directive to develop affordable CMD measures is an important issue in terms of procurement. Current cost-exchange ratios associated with CMs favor attackers over defenders; cruise missiles can be cheap and defenses are costly. For example, Patriot missiles, bought at roughly $2.5 million apiece, can be effective interceptors for incoming CMs, but those CMs may be simple designs costing only a couple hundred thousand dollars apiece. Moreover, intercept costs are only one of many kill chain expenditures that can make CMD forces much more expensive than the CM threat. On the whole, the Pentagon seems to have promoted the pursuit of advanced CMD programs to combat sophisticated CM attacks. In terms of simple CM threats, however, more resources may be needed to produce less costly but nonetheless effective defenses. DOD's Defense Advanced Research Projects Agency (DARPA) has a low-cost cruise missile defense program that focuses on countering low-tech CMs by reducing the cost of interceptors. DARPA hopes to develop CMD interceptors that would cost as little as $40,000. Even cheaper intercept technologies may be required for cost-effective CMD, especially if faced with large-scale attacks by cheap CMs. Inexpensive but proven "jamming" technology (e.g., high-power microwaves) that can disrupt CM guidance systems might be a potentially useful approach. Also, point defense weapons, such as radar-guided machine guns with high rates of fire, could be employed against less sophisticated CMs. A final consideration pertains to the deactivation of JCIET. Combat identification remains, and is likely to remain one of the most challenging aspects of CMD. Overseers of DOD's activities may wish to ask why the department deactivated the only organization dedicated specifically to improving joint CMD combat identification capabilities. It is not evident that other organizations, such as JTAMDO, have increased their work on CMD combat identification issues to make up for JCIET's demise. Nor is it clear that improvement in other facets of CMD will make up for ineffective combat identification. If a friendly or neutral manned aircraft is inadvertently shot down by U.S. CMD platforms in the future, DOD's decision to deactivate JCIET may come under intense scrutiny.

Congress has expressed interest in cruise missile defense for years. Cruise missiles (CMs) are essentially unmanned attack aircraft--vehicles composed of an airframe, propulsion system, guidance system, and weapons payload. They may possess highly complex navigation and targeting systems and thus have the capability to sustain low, terrain-hugging flight paths as well as strike with great accuracy. CMs can be launched from numerous platforms--air-, land-, or sea-based--and they can be outfitted with either conventional weapons or weapons of mass destruction (WMD). The Department of Defense is pursuing several initiatives that seek to improve capabilities against an unpredictable cruise missile threat. This report will be updated as events warrant.

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

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

A number of different laws authorize the programs and set the policies affecting the U.S. specialty crop sector, which is comprised of producers, handlers, processors, and retailers of fruit, vegetable, tree nut, and nursery crops. One of these is the periodic, omnibus farm act, commonly called the farm bill, that guides the U.S. Department of Agriculture's (USDA) commodity income and price support programs, and authorizes and directs funding for the major agricultural trade, conservation, and domestic food assistance programs (e.g., the school lunch program and food stamps), among many others. Other laws besides the farm bill also set policies for programs affecting the specialty crop sector. Congress may make changes to these laws within the farm bill, or within annual appropriations bills, or in separate legislation. These separately authorized programs include those that help producers insure their crops against losses; provide monetary assistance after disastrous losses; protect agriculture from foreign diseases and pests; promote orderly marketing; and protect producers and handlers from fraud in market transactions. On December 21, 2004, President Bush signed into law the Specialty Crops Competitiveness Act of 2004 ( P.L. 108-465 ; H.R. 3242 ). The act identifies several major challenges facing specialty crops: high vulnerability to emerging pests and diseases, trade restrictions for phytosanitary reasons, nontariff trade barriers, and competition from subsidized imports. To meet these challenges, the act authorizes (1) a pest and disease response fund within the U.S. Treasury; (2) a requirement that USDA's Animal and Plant Health Inspection Service (APHIS) reduce a backlog of export permits; (3) a peer review system to strengthen the science behind the APHIS standards that govern import and export permit requests; (4) additional funds for a program that provides technical assistance to overcome barriers to U.S. exports of specialty crops; (5) block grants to states to support programs to increase the competitiveness of each state's specialty crops; and (6) a higher priority for specialty crop research. H.R. 3242 , as introduced, would have provided $508 million per year for five years in mandatory money provided through the Commodity Credit Corporation (CCC) to implement the programs in the bill. As enacted, the law authorizes $59 million per year in discretionary funds, subject to appropriation. The act allocates the majority of authorized funds to support the program of block grants to the states, as did H.R. 3242 . Each state is to use the funds to develop and promote the state's specialty crop industry. The Administration's FY2006 budget request did not propose funding for any of the programs authorized in P.L. 108-465 . The leading specialty crop industry group, the United Fresh Fruit and Vegetable Association (now the United Fresh Produce Association (UFPA)), called for full funding of the block grant program ($44.5 million) and the technical assistance program for exports ($2 million), and for maintenance of the Agricultural Marketing Service Training and Development Center in Fredericksburg, VA ($1.5 million). The industry group also called for an additional $42 million in appropriated funding to expand the Fruit and Vegetable program, which provides free fresh produce to schools to encourage children to snack on fruits and vegetables rather than on less nutritious foods. The final act making FY2006 appropriations for USDA ( P.L. 109-97 ) contained $7 million for the specialty crop block grant program, and no additional appropriated funds for the Fruit and Vegetable program beyond the $9 million in mandatory funds authorized in a 2004 law reauthorizing and revising child nutrition programs ( P.L. 108-265 ). Separate legislation was introduced in the 109 th Congress to amend the child nutrition law to authorize $20 million annually in FY2006 and FY2007 to support the expansion of the Fruit and Vegetable program, but it was not passed ( H.R. 3562 / S. 1556 ). The Administration's FY2007 budget request did not propose any funding for programs authorized by P.L. 108-465 . As of the date of this report, the House-passed USDA appropriations bill included $15.6 million for specialty crop block grants to states for FY2007 ( H.R. 5384 ). A provision in Title VII of the Senate-reported bill would provide $10 million in FY2007 for the program. It is expected that Congress will complete action on agriculture appropriations after the November 2006 elections. In anticipation of possible consideration of specialty crop policies if Congress takes up debate on a new farm bill in 2007, Congresswoman Darlene Hooley and Senator Ron Wyden introduced companion measures in the 109 th Congress to amend the Specialty Crops Competitiveness Act of 2004 and propose additional policies ( H.R. 3562 / S. 1556 , the Specialty Crop and Value-Added Agriculture Promotion Act of 2005). The bills contain provisions to expand the existing block grant program and to create a new program of block grants to states to help producers develop business plans and marketing opportunities for value-added products, among several other proposals. See CRS Report RL33520, Specialty Crops: 2008 Farm Bill Issues , by [author name scrubbed], for more information on this and other 2007 farm bill proposals. Legislation was introduced in February 2005 that would have authorized $50 million annually through FY2007 in mandatory Commodity Credit Corporation funds to support the construction, improvement, and rehabilitation of farmers' markets ( H.R. 710 , the Farmers' Markets Infrastructure Assistance Act of 2005). Although Congress authorized a Farmers' Market Promotion program in the 2002 farm act ( P.L. 107-171 ) for the purpose of increasing the number of direct producer-to-consumer sales opportunities, no funds for the program have been appropriated to date. In the interim, USDA's Agricultural Marketing Service (AMS) has supported farmers' markets by tailoring to their needs some of the agency's generally available research and technical assistance under this mission area. H.R. 710 would provide targeted support for the physical establishment of farmers' markets. The 109 th Congress had taken no action on this bill as of the date of this report. Under SS304 of the Tariff Act of 1930 as amended (19 U.S.C. 1304), every imported item must be conspicuously and indelibly marked in English to indicate to the "ultimate purchaser" its country of origin. The U.S. Customs Service generally defines the "ultimate purchaser" as the last U.S. person who will receive the article in the form in which it was imported. For example, if a supermarket receives a shipment of Chilean grapes or Mexican tomatoes that were packaged in the country of origin into containers ready for retail sale, the law requires that their "immediate containers" carry a country of origin mark. If, on the other hand, they arrive in large boxes and are sold loose from store bins, labeling is not required because the law allows for certain products to be exempted from COOL requirements, namely "vegetables, fruits, nuts, berries ... which are in their natural state or not advanced in any manner further than is necessary for their safe transportation" (19 C.F.R. 134.33). Section 10816 of the 2002 farm act amended the Agricultural Marketing Act of 1946 to require retail-level COOL on "perishable agricultural commodities," as defined by the Perishable Agricultural Commodities Act (PACA; 7 U.S.C. SS 499a et seq.), among several other provisions. More specifically, it requires PACA-regulated retailers (those selling at least $230,000 a year in fruits and vegetables) to inform consumers of the origin of these products "by means of a label, stamp, mark, placard, or other clear and visible sign on the covered commodity or on the package, display, holding unit, or bin containing the commodity at the final point of sale to consumers." The 2002 law required the labeling to be implemented by September 30, 2004. House-Senate conferees on the FY2004 consolidated appropriation act ( H.R. 2673 ; P.L. 108-199 ), which incorporated USDA funding, agreed to language to delay the September 30, 2004, mandatory labeling date for fruits and vegetables (and other commodities) until September 30, 2006. The USDA appropriations act for FY2006 postponed the date two more years--until September 30, 2008 ( P.L. 109-97 ). The United Fresh Produce Association generally is not in favor of mandatory COOL. Beginning with consideration of the 2002 farm bill COOL provision, UFPA officials have maintained that the program should be voluntary, and that COOL laws should apply to all food items and cover all channels of distribution, including food service sales. The industry is concerned that a mandatory program will lead retailers to try to shift the burden of labeling back up the chain to packer/shippers and producers. Opponents of mandatory COOL point out that the industry has voluntarily labeled U.S.-grown produce and tree nuts for years, and that the trend in supermarkets and other retail outlets also has been toward increased COOL in response to consumer preferences. Proponents of a mandatory COOL program (which include the American Farm Bureau, the National Farmers Union, some domestic fruit and vegetable producers, and some consumer organizations) argue that consumers have a right to choose which foods they buy based on knowledge of their source, particularly since imports are increasing at a fast pace, and thus the risk is higher that foods with health and safety problems could enter the U.S. marketplace. Although imported fruits and vegetables have been the source of some foodborne illness outbreaks (e.g., the hepatitis A outbreak in November 2003, linked to green onions from Mexico), illness caused by pathogenic organisms in U.S.-grown produce also occurs, as it did with an outbreak of illness from E. coli O157:H7 contamination of fresh spinach from California in October 2006. Food safety officials maintain that regulations already require imported produce to meet the same standards as U.S. produce, and that country-of-origin labeling does not increase food safety or protect public health. Congress passed a planting flexibility provision in the 1996 farm act ( P.L. 104-127 ), allowing producers of program crops to respond to market signals when choosing what to plant. The term refers to the ability to receive subsidy payments for a particular base crop (such as corn) on a specific base acreage (as declared by the farmer during the 2002 program sign-up period), but to grow a different crop on that same acreage. In that same act, however, Congress added language restricting producers from growing fruit and vegetable crops on base acres, except in limited cases where producers had a history of planting such crops. Specialty crop growers maintain that allowing program crop producers to switch even small numbers of acres to fruits or vegetables can significantly destabilize the produce market. Congress renewed the restriction on growing specialty crops on program acres in the 2002 farm act. In that act, however, soybeans became eligible for declaration as a "base" crop that could receive both direct payments and counter-cyclical payments. This raised an unforeseen problem, primarily for some farmers in the Midwest who traditionally have rotated soybeans with vegetable crops grown on contract for processing. Many producers found that the new soybean program rules severely restricted the amount of acreage on which they could continue that rotation. They also found owners of rental farmland much less willing to rent their soybean program acres to farmers wanting to grow vegetables, for fear of losing base acreage on which their payments are based. Companion bills were introduced in the 109 th Congress that would have reduced program payments on an acre-for-acre basis in a year in which a producer planted fruits or vegetables for processing on base acres. The following year, however, if the producer again planted a program crop on those acres, that year's payment would be calculated on the full number of base acres for the covered commodity. In other words, no base acres could potentially be "lost" for having been planted to a fruit or vegetable crop for one year. The bills also provided that, in the event the Secretary authorized a recalculation of base acres, any acres that had been planted to fruits and vegetables for processing would have been counted as having been planted to the program crop. The 109 th Congress has taken no action on these bills as of the date of this report. Regardless of what other specialty crop policies may be discussed for possible inclusion in the next farm bill, changing or continuing planting flexibility policies likely will be a key issue in that debate. The concept of "decoupling" is important in the context of U.S. obligations under multilateral trade agreements. The term refers to separating the direct link between federal farm payments and farmers' decisions on what to plant on program acres. Efforts to decouple farm income and commodity support began in the 1980s, and Congress passed the first major decoupling provisions, using planting flexibility as the mechanism, in the 1996 farm act. At the same time, the act prevented producers from planting fruits and vegetables on "flex" acres except under limited circumstances. In 2004, the World Trade Organization ruled that specific provisions of the U.S. cotton program--some related to the U.S. policy on planting flexibility--were out of compliance with the Uruguay Round Agreement on Agriculture. Some trade and market analysts, as well as legislators, became concerned that legislative changes might be necessary to bring existing cotton program operations into compliance, and that such potential changes could necessitate that the 2002 farm act be reopened well before its scheduled expiration in 2007. There was some concern, therefore, that the existing planting restrictions might need to be re-examined. However, it subsequently became apparent that the process of settling upon and implementing a compliance plan to meet the WTO finding would move slowly, and that any potential changes in the current planting restrictions affecting specialty crops would not need to be considered until Congress takes up the 2007 farm bill. At present, the H-2A program is the only program for temporarily importing foreign agricultural workers, sometimes referred to as agricultural guest workers. Employers interested in importing workers under this program must first apply to the U.S. Labor Department for a certification that U.S. workers capable of performing the work are not available and that employment of alien workers will not adversely affect the wages and working conditions of similarly employed U.S. workers. A number of bills were introduced in the 109 th Congress proposing to make changes to the H-2A program ( S. 359 / H.R. 884 , H.R. 3857 , S. 2087 , and others). Some of them contain provisions that would establish mechanisms for certain foreign agricultural workers to become U.S. legal permanent residents. None of these bills had been passed into law as of the date of this report. Positions on guest worker reform proposals are mixed within the specialty crop industry and larger agriculture community. The UFPA is strongly in favor of the proposals that have been introduced, arguing that the lack of a sufficient, legal workforce has reached crisis proportions. They further maintain that S. 359 / H.R. 884 would provide a stable workforce for growers and more job stability for workers, give workers better wages and working conditions, and let responsible guest workers earn the right to stay in the United States, among other things. Opponents of the bills largely frame their arguments in terms of immigration policy, arguing that the measures would give amnesty to illegal immigrants, and make it easier for criminals and terrorists to get into the country. The current discussion of guest worker programs takes place against a backdrop of historically high levels of unauthorized migration to the United States. Supporters of a large-scale temporary worker program argue that such a program would help reduce unauthorized migration by providing a legal alternative for prospective foreign workers. Critics reject this reasoning and instead maintain that a new guest worker program would likely exacerbate the problem of illegal migration. The consideration of any agricultural guest worker reform proposals would appear to raise a variety of issues. Among them are the following: how would the requirements of any new program compare to the requirements of the existing one; who would be eligible; should the program include a mechanism for participants to obtain legal permanent resident status; how would family members of eligible individuals be treated; what labor market test, if any, would the program employ; would the program be numerically limited; how would the rules and requirements of the program be enforced; and what security-related provisions, if any, would be included?

The U.S. specialty crop sector is comprised of producers, handlers, processors, and retailers of fruit, vegetable, tree nut, and nursery crops. The major U.S. Department of Agriculture (USDA) commodity price and income support programs do not include specialty crops, but the industry benefits generally from USDA programs related to trade, conservation, credit, protection from pests and diseases, domestic food assistance programs, crop insurance and disaster payments, research, and other areas. Certain programs of the Food and Drug Administration, the Department of Homeland Security, and the Department of Labor also affect the specialty crop sector. The 108th Congress passed the first law intended to address selected issues of importance to the specialty crop industry as a whole (the Specialty Crops Competitiveness Act of 2004, P.L. 108-465). It is widely expected that this act will serve as the basis of more comprehensive debate on policies affecting the sector when the House and Senate Agriculture Committees begin consideration of the omnibus farm bill that would take effect when the current farm act (P.L. 107-171) expires in 2007. Another bill that might serve a similar purpose has been introduced in the 109th Congress. The Specialty Crops and Value-Added Agriculture Promotion Act (S. 1556) would amend the 2004 Act to make some of its authorities permanent, and to address issues related to trade, the revenue insurance program, and marketing opportunities for specialty crops. See CRS Report RL33520, Specialty Crops: 2008 Farm Bill Issues, by [author name scrubbed] for more information. Bills addressing a number of other industry-related issues were introduced in the 109th Congress. These include appropriations for the programs authorized in P.L. 108-465 (H.R. 2744); planting flexibility proposals that could have affected specialty crop supplies and prices (H.R. 2045/S. 1038; S. 194); and guest worker program reform (S. 359/H.R. 884, and others). This report summarizes the 109th Congress's activity on these bills and other specialty crop issues, and will not be updated.

In 2009, congressional debate focused primarily on stimulating the economy, health care reform, and climate change. These issues are not only interrelated, but are also intimately linked with the taxation of businesses. For example, in February, Congress enacted the American Recovery and Reinvestment Act of 2009 ( P.L. 111-5 ). Two of the act's business tax provisions provided for a temporary increase of small business expensing and temporary "bonus" depreciation limits, while other provisions allow a delayed recognition of cancelation of debt income and five-year carryback of net operating losses for small businesses. The act also modified several renewable energy provisions, including the Renewable Energy Production Tax Credit, the Investment Tax Credit, and tax credit for Alternative Fueling Property. Congressional debate in 2010 has focused on extending selected expired tax provisions and reforming health care. In particular, the Tax Extenders Act of 2009, H.R. 4213 , passed the House on December 9, 2009, and the Senate on March 10, 2010. In addition, the debate on health care reform is ongoing and the President's Fiscal Year 2011 Budget Proposal calls for the modification of selected business taxes, the removal or restriction of several oil and gas tax provisions, and reforming international taxation. As the year progresses, it is anticipated that congressional deliberations will consider the extension of several expiring business tax provisions, energy taxation, tax shelters, and international taxation, while continuing to examine opportunities for economic stimulus. The United States has what tax analysts sometimes term a "classical" system for taxing corporate income. That is, it imposes a tax on corporate profits--the corporate income tax--that is separate and generally in addition to the individual income taxes that corporate stockholders pay on their corporate-source capital gains and dividends. The corporate income tax applies a 35% rate to most corporate taxable income, although reduced rates ranging from 15% to 34% apply to corporations earning smaller amounts of income. The base of the tax is corporate profits as defined by the tax code--generally gross revenue minus interest, wages, the cost of purchased inputs, and an allowance for depreciation. Since 1980, federal corporate tax revenue has generally varied between 1% and just over 2% of gross domestic product (GDP). Congressional Budget Office (CBO) data show that corporate tax receipts registered an "uptick" in FY2005 and FY2007--rising to 2.3% and 2.7% of GDP, respectively--before reverting to a historically normal 2.1% in 2008 and falling to 1.0% in 2009. CBO projects corporate tax revenue as a percentage of GDP to remain at this level through 2010, reflecting reduced corporate profits due to the economic recession, before trending upward beginning in 2011. CBO data show a similar trend regarding corporate tax receipts as a share of total taxes, with an "uptick" in FY2005 and FY2007 from 12.9% to 14.4% of total federal revenues, before reverting to a 12.1% in 2008 and then dramatically falling to 6.6% in 2009. CBO, again, projects the percentage of total revenue from corporate tax revenue to remain depressed through 2010. Not all businesses are subject to the corporate income tax, however. Income earned by partnerships is "passed through" and taxed to the individual partners under the individual income tax without imposition of a separate level of tax at the partnership level. Also, businesses that have no more than 100 stockholders and meet certain other requirements ("S" corporations), as well as certain other "pass through entities," are not subject to the corporate income tax, but are taxed in the same manner as partnerships. As Congress debates business tax policy, several policy questions are commonly raised. These questions highlight three criteria that tax policy experts find informative for the evaluation of tax policy options. In general terms the criteria are equity, economic efficiency, and administrability. The policy questions are as follows. What would be the impact of the investment incentives on the economy's capital stock? Does the reduced tax burden increase the supply of capital and saving, thus increasing long-run growth? Or, is the economy's supply of capital relatively fixed, meaning the investment incentives simply interfere with the efficient allocation of investment? Were the enacted business tax cuts effective in stimulating the economy in the short run, thus aiding recovery from the 2001 recession? Or, do planning lags and other factors make business tax cuts ineffective as a fiscal stimulus, meaning the relation between the business tax cuts and economic recovery was serendipitous? What is the effect of the business tax cuts on the overall fairness of the tax system? Do the reductions accrue primarily to relatively high-income stockholders and corporate creditors, or will any reductions on tax progressivity be outweighed by positive employment effects? How will the business tax cuts affect U.S. economic competitiveness? Have provisions such as the domestic production deduction helped revitalize domestic manufacturing, or do the deduction and other competitiveness provisions interfere with the efficient and flexible participation of U.S. businesses in the world economy? The President's Fiscal Year 2011 Budget Proposal proposes to modify selected business taxes, remove or restrict several coal, oil, and gas tax provisions, and reform international taxation. Taken as a whole, the Joint Committee on Taxation estimated that these provisions would increase the overall level of business taxation relative to current law. The President's budget contains proposals to raise selected general business taxes, while lowering other general business taxes. On net, the budget proposes to increase the level of business taxation. The most prominent of these business tax proposals, in terms of revenue, is the repeal of last-in first-out (LIFO) inventory accounting (estimated to raise $75.3 billion over 10 years). Under LIFO, a firm records the last units purchased as the first units sold. Given that prices generally rise over time because of inflation, this method records the sale of the most expensive inventory first and thereby decreases profit and reduces taxes. In addition, the President's budget proposes to codify the "economic substance doctrine" ($7.2 billion), tax carried interest as ordinary income ($28.6 billion), and reinstate a series of superfund taxes ($19.2 billion). Additionally, the President's budget contains several provisions that would general business tax receipts. The most prominent of these proposals, in terms of revenue, is to make the Research and Experimentation tax credit permanent ($70.5 billion). The budget also proposes to eliminate capital gains taxation on small businesses ($7.9 billion). The President's budget proposes to repeal or modify a number of coal, oil, and gas provisions. Among the provisions proposed for repeal are the Section 199 production activities deduction, percentage depletion, and expensing of intangible drilling costs. Taken together, these provisions in the President's Budget Proposal are estimated to raise approximately $40 billion over the 2010-2020 budget window. Additionally, general provisions, such as the repeal of LIFO, modification of the tax rules for dual-capacity taxpayers and the reinstatement of the superfund taxes, are expected to also impact the coal, oil, and gas industries. The President's budget proposes changes to rules on deferral, foreign tax credits, and transfer pricing. The deferral proposal would eliminate a U.S. person's ability to currently deduct interest expenses that are related to deferred foreign-source income; instead the deduction for those expenses would be deferred until the foreign-source income is subject to U.S. tax. The remainder of the deductions could be carried forward ($35.5 billion). The foreign tax credit proposals would prorate foreign taxes over the taxpayer's entire foreign income, including deferred income and address issues inappropriate separation of creditable foreign taxes from the associated foreign income ($53.7 billion). In effect this would negate the ability of taxpayers to cherry-pick repatriations from high-tax countries--and reinvest low-tax country profits offshore--to maximize the foreign tax credit. Finally the proposals related to transfer pricing are intended to tax any excessive returns generated by the transfer of intangible assets to affiliates in low-tax countries ($12.4 billion). One aspect of the congressional debate over health care reform is the effect on small business. Specifically, there is concern over the effect of a "pay or play" mandate to require firms to provide health insurance for their employees or pay a penalty. Current proposals have exemptions for small businesses, and also propose to provide subsidies for purchasing insurance. Economic theory suggests that health insurance costs (and any penalties) will be passed on to labor income, but that may be more difficult for employers of lower-wage workers. Furthermore, average wages are generally lower for small firms (except for the smallest). Both the House bill ( H.R. 3962 , passed on November 14, 2009) and the Senate bill ( H.R. 3590 ) would exempt small businesses from penalties. The House bill would apply no penalties to firms with $500,000 or less in payroll, and the Senate bill would exempt firms with 50 or fewer employees. As a result, very few smaller businesses would be affected. The proposals also provide temporary credits to subsidize small employers' contributions to health insurance for lower-income employees. The size of the subsidies depends on the size of the firm and the firm's average employee compensation. The credits are the same in the two bills (except that the Senate bill allows a smaller credit for nonprofits), and would be as much as 50% of the employer's cost. The subsidy for taxable firms is provided as a nonrefundable income tax credit and would not benefit firms with no income tax liability; the Senate bill has a separate 35% credit against payroll taxes for nonprofits. The Tax Extenders Act of 2009 is expected to provide businesses with tax relief through the one year extension of multiple tax provisions that expired at the end of 2009. The House- and Senate-passed versions of H.R. 4213 differ primarily in the revenue offsets utilized. Both versions propose to extend the research credit ($6.6 billion); the active financing exception from Subpart F of the tax code ($3.9 billion); the special 15-year cost recovery period for certain leasehold, restaurant, and retail improvements ($4.9 billion); and incentives for biodiesel and renewable diesel ($1.0 billion). The House-passed version of H.R. 4213 offsets the cost of extending multiple tax provisions though the taxation of carried interest as ordinary income and an accounting change in the payment of corporate estimated taxes. In contrast, the Senate-passed version of H.R. 4213 proposes to offset the cost of extending multiple tax provision primarily through a codification of the "economic substance doctrine" and an exclusion of tax benefits for "black liquor." A proposed amendment to H.R. 4213 , the American Jobs and Closing Tax Loopholes Act of 2010, would continue to extend these provisions, but would offset the cost with multiple measures including treating a portion of carried interest as ordinary income and closing several international tax loopholes. Several of the international tax provisions were also included in the President's Budget Proposal and are intended to curtail abuses of the U.S. foreign tax credit system and other targeted areas. These international provisions are estimated to raise $14.5 billion over 10 years. The American Recovery and Reinvestment Act of 2009 (ARRA) contained multiple business tax provisions. The majority of these provisions can be grouped into two general categories of incentives: those which promote investment in alternative energy and those which benefit the cash-flow of businesses. The major business-related energy incentives in ARRA focused on promoting renewable energy. The principal renewable energy provision increased the number of facilities eligible for the Renewable Energy Production Tax Credit (PTC) through a three-year extension of the placed-in-service date requirement. This provision was estimated to cost $13.1 billion over the next 10 years and composed approximately 73% of the cost of the business-related energy provisions in ARRA. The remainder of the energy provisions focused on modifications to the Investment Tax Credit (ITC), including the creation of the Advanced Energy Manufacturing Facility Investment Tax Credit, which were estimated to cost $2.3 billion over 10 years. The major business incentives in ARRA focus on increasing near-term cash flow. Specifically, the acceleration of capital cost recovery and deferral of certain income related to the discharge of indebtedness reduce taxable business income and, thus, business tax receipts. ARRA contained two provisions that accelerated capital cost recovery: an extension of bonus depreciation and enhanced small business expensing. The deferral of certain income related to the discharge-of-indebtedness provision allowed for the deferral of cancellation of debt income (CODI) for four or five years and recognized the CODI as income over the following four years. These three provisions were estimated to cost approximately $6.7 billion over 10 years. In contrast, the remaining business incentives in ARRA were estimated to raise nearly $600 million over 10 years. The Worker, Homeownership, and Business Assistance Act of 2009 contained several business tax provisions. The business tax provisions included an extension of the carryback period for business losses (NOL) and a delay in the implementation of the worldwide interest allocation rules. The act extended the carryback period to five years for all business taxpayers except those who received certain federal assistance relating to the financial crisis. A taxpayer could use the extended carryback period for an NOL incurred in 2008 or 2009, but not both. The amount of loss that could be carried back to the fifth year was limited to 50% of the taxpayer's taxable income in the fifth carryback year. This limitation, however, did not apply to businesses with $5 million or less in gross receipts that made a five-year carryback election after enactment of the bill. This provision was estimated to cost $10.4 billion for FY2010 through FY2019. The act also delayed the implementation of the worldwide interest allocation rule until 2018. The worldwide interest allocation provision was designed to correct what some argue was an imperfection in the design of the foreign tax credit rules. In general, the tax code places a limit on the foreign tax credit. To calculate the limit, firms are required to separate interest and other expenses according to source--foreign or domestic. Some believed that implementing worldwide interest allocation would shield taxpayers from double taxation of foreign-source income. This provision was estimated to raise $20.1 billion for FY2010 through FY2019. After the passage of ARRA, the 111 th Congress has continued deliberations focused on stimulating the economy. One topic of these discussions was on how the tax code--and business provisions--could aid economic conditions. Given the policy goal of increasing aggregate demand, business tax cuts, such as in ARRA, have traditionally focused on "cash-flow" and investment measures. Cash-flow provisions attempt to stimulate the economy by allowing businesses to increase their cash on hand by realizing existing tax attributes in the current period, as opposed to future years. These measures allow businesses immediate access to working capital that may be useful to maintaining business operations. An example of a cash-flow measure in ARRA was the extension of the net operating loss carryback period from two to five years. The Gulf Opportunity Zone Act of 2005 ( P.L. 109-135 ) enacted a similar provision for qualified losses occurring in the Gulf Opportunity Zone (or GO Zone). Investment measures attempt to stimulate the economy by inducing investment spending, typically through measures that change the cost of capital. Examples of investment measures in ARRA were one year extensions--through the end of 2009--of bonus depreciation and small business expensing. The Economic Stimulus Act of 2008 ( P.L. 110-185 ) also contained a one-year extension of these provisions, covering 2008. The tax code contains a set of relatively narrowly applicable tax benefits (the "extenders") that are temporary in nature--each were enacted for only fixed periods of time, and are scheduled to expire on various dates. The benefits tend to be tax incentives: provisions designed to encourage certain types of investment or activity thought to be economically or socially desirable. The question with each extender, then, is whether there is a market failure or socially desirable goal that makes the incentive's intervention in the market desirable. As targeted tax incentives, the benefits tend to raise a similar policy question: according to traditional economic theory, smoothly functioning markets and undistorted prices generally allocate the economy's scare resources in the most efficient way. Absent market malfunctions--failures that economists believe are more the exception than the rule--economic theory indicates that tax benefits or penalties that interfere with the market reduce economic efficiency and reduce overall economic welfare. One extender is the research and experimentation (R&E) tax credit, which was first enacted in 1981, and which has been renewed on numerous occasions. The credit provides businesses a tax benefit that is linked to firms' increases in research outlays in the current year over a statutorily defined base period. The credit is based on economic theory's notion that free markets do not operate smoothly in the case of research and development--that is, absent government support, firms would not spend as much on research as is economically efficient. (It could also be argued, however, that the amount of support provided by the R&E credit and several other extant research subsidies more than compensate for the theoretical shortfall in research.) The R&E credit's most recent extension was provided by the Emergency Economic Stabilization Act of 2008 ( P.L. 110-343 ) in October 2008. The act also increased the rate for the alternative simplified credit (ASIC) from 12% to 14% and repealed the alternative incremental research credit (AIRC) for the 2009 tax year only. In the 111 th Congress, there has been interest in extending the R&E credit and in making the tax credit permanent. The extenders in general have been a continuing issue for Congress--in part because their temporary nature necessitates periodic action if they are not to expire, and in part because of the strong support for many of the benefits. As noted above, an element of Division C of P.L. 110-343 , the Tax Extenders and Alternative Minimum Tax Relief Act of 2008, extended the R&E credit. In addition, the act retroactively extended several temporary tax provisions for individuals and businesses through December 31, 2009. Tax extenders have continued to receive congressional attention in 2010, through passage of the Tax Extenders Act of 2009 ( H.R. 4213 ), which is discussed above, by both the House and Senate. At the outset of the second session of the 111 th Congress, the focus of energy taxation appears to be two-fold: enactment of a new set of incentives aimed at energy conservation and promotion of alternative energy sources and a revenue-raising, scaling-back of tax cuts that were enacted in recent years for the oil and gas companies. The first of these two goals were addressed, in part, in ARRA, which contained a number of provisions to encourage investment in alternative energy and alternative energy production. These provisions are outlined above. In addition, the President's FY2011 Budget Outline contains several provisions aimed at achieving the second goal. If fully enacted the provisions would eliminate tax preferences for the oil and gas industry estimated to raise $36.5 billion over 10 years. The repeal of the Section 199 domestic production deduction, enacted in The American Jobs Creation Act of 2004 (AJCA; P.L. 108-357 ) and never fully implemented, accounts for over 40% of this total. Another nearly 44% of the total is achieved through the elimination of two provisions enacted during World War I: the expensing of intangible drilling costs and percentage depletion, discussed above. Corporate "tax shelters" are another area where Congress may look for tax-increasing revenues. They concern policymakers because of their corrosive effect on tax equity and popular perceptions about the tax system's fairness. In popular usage, the term "tax shelter" denotes the use of tax deductions or credits produced by one activity to reduce taxes on another: the first activity "shelters" the second from tax. In economic terms, a tax shelter can be defined as a transaction (for example, an investment or sale) that reduces taxes without resulting in a reduced return or increased risk for the participant. But the term is so vague and general in most usages that it is sometimes defined simply as a tax-saving activity that is viewed as undesirable by the observer using the term. Under most definitions, tax shelters can be either illegal (constitute "tax evasion") or legal (constituting "tax avoidance"). Congress has evinced considerable interest in tax shelters in recent years and has enacted some restrictions into law. The American Jobs Creation Act of 2004 (AJCA; P.L. 108-357 ) contained a number of provisions designed to restrict tax shelters. In part, the act's provisions were directed at specific tax shelters--for example, leasing activities and the acquisition of losses for tax purposes ("built in" losses). In addition, the act included provisions--for example, revised penalties and reporting requirements--designed to restrict sheltering activity in general. In 2006, the Senate version of the Tax Increase Prevention and Reconciliation Act (TIPRA; P.L. 109-222 ) contained a number of tax shelter restrictions, but the provisions were not included in the conference report. The Senate's TIPRA provisions included what the bill termed a "clarification" of the economic substance doctrine that has been followed in a number of court decisions applying to tax shelters. Generally, the economic substance doctrine disallows tax deductions, credits, or similar benefits in the case of transactions not having economic substance. The Senate version of TIPRA would have integrated aspects of the doctrine into the tax code itself. A similar measure was contained in the Senate version of the AJCA, but was not adopted. The President's FY2011 Budget Outline includes the codification of the economic substance doctrine as a revenue-raising "offset" for tax cuts elsewhere in the tax code. This provision is estimated to raise $4.2 billion over 10 years. There are some indications that Congress may look to the tax treatment of U.S. firms' foreign income in searching for additional tax revenue. In part, the focus on international taxation stems from a concern about tax benefits that are perceived to promote foreign "outsourcing"--the movement of U.S. jobs overseas. Economic theory is skeptical about whether tax policy towards U.S. multinationals can have a long-term impact on domestic employment, although short-term and localized impacts are certainly possible. Taxes can, however, alter the extent to which firms engage in overseas operations rather than domestic investment. Under current law, a tax benefit known as "deferral" poses an incentive for U.S. firms to invest overseas in countries with relatively low tax rates. Deferral provides its benefit by permitting U.S. firms to postpone their U.S. tax on foreign income as long as that income is reinvested abroad in foreign subsidiaries. The benefit is generally available for active business operations abroad, but the tax code's Subpart F provisions restrict deferral in the case of income from passive investment. If made, proposals to restrict deferral may consist of expansion of the range of income subject to Subpart F. In recent years, however, the thrust of legislation has been more in the direction of expanding deferral and cutting taxes for overseas operations. For example, the AJCA cut taxes on overseas operations in several ways, while in 2006, TIPRA restricted Subpart F in the case of banking and related businesses receiving "active financing" income and in the case of the "look through" treatment overseas operations receive from subsidiary firms. Further, several analysts have argued that attempts to tax overseas operations are either counterproductive or outmoded in the modern integrated world economy. Traditional economic analysis, however, suggests that overseas investment that is taxed at a lower or higher rate than domestic income impairs economic efficiency. However, a consensus appears to be emerging that the U.S. corporate income tax rate should be reduced. The major tax cuts enacted in 2001 and 2003 with the Economic Growth and Tax Relief Reconciliation Act (EGTRRA; P.L. 107-16 ) and the Jobs and Growth Tax Relief Reconciliation Act (JGTRRA; P.L. 108-27 ), respectively, focused more on individual income taxes than corporate taxes, and included measures such as reductions in statutory tax rates, tax cuts for married couples, and expansion of the child tax credit. JGTRRA, however, contained a number of tax cuts aimed at businesses, as did legislation enacted in nearly each year since 2004. The most prominent business tax cuts can be summarized as follows: temporary "bonus" depreciation provisions designed to spur investment spending; capital gains and dividend reductions, intended (in part) to increase capital formation and the flow of savings to the corporate sector; extension of a set of narrowly-applicable temporary tax benefits (the "extenders") that were addressed by several acts; and provisions enacted in 2004 designed to boost U.S. manufacturing and competitiveness (the domestic production deduction and foreign tax credit provisions). Enacted Legislation The Job Creation and Worker Assistance Act of 2002 (JCWA; P.L. 107-147 ) contained temporary "bonus" depreciation provisions that permitted firms to deduct an additional 30% of the cost of property in its first year of service rather than requiring that portion to be depreciated over a period of years. The provision generally applied to machines and equipment (but not structures) and was limited to property placed in service after September 11, 2001, and before January 1, 2005. JCWA also temporarily extended the net operating loss "carryback" period (the years in the past from whose income a firm can deduct losses) to five years from two years. The provision only applied to losses in 2001 and 2002. JCWA also temporarily extended a set of expiring tax benefits (the "extenders" discussed above), many of which applied to business taxes. While a principal thrust of the Jobs and Growth Tax Relief Reconciliation Act (JGTRRA; P.L. 108-27 ) was accelerating the effective date of individual income tax cuts enacted in 2001, the act also contained a number of business provisions. JGTRRA's tax cuts for dividends and capital gains applied to individual income taxes, but nonetheless reduced the tax burden on stockholders' corporate-source income. Under the U.S. classical method of business taxation, corporate source income is taxed twice: once under the corporate income tax and once under the individual income tax--an instance of double-taxation that is thought by economists to inefficiently restrict the flow of capital to the corporate sector. JGTRRA's reductions were an incremental step in the direction of removing the double-taxation--a reform economists term tax "integration." The reductions were temporary, and were originally scheduled to expire at the end of 2008. In addition to its capital gains and dividend reduction, JGTRRA increased bonus depreciation to 50% and extended its coverage to the period between May 5, 2003, and January 1, 2005. JGTRRA also temporarily (for 2003, 2004, and 2005) increased the "expensing" allowance for small-business investment from $25,000 to $100,000. The American Jobs Creation Act of 2004 (AJCA; P.L. 108-357 ) grew out of legislation designed to end a dispute between the European Union (EU) and the United States over a U.S. tax benefit for exporting (the extraterritorial or ETI provisions) that had been determined to contravene the World Trade Organization agreements' prohibition on export subsidies. The EU objected to the ETI benefit and imposed countervailing tariffs authorized by the WTO. AJCA repealed ETI, but also enacted a set of new WTO-legal business tax cuts designed, in part, to offset the impact of ETI's repeal on domestic businesses. However, the scope of AJCA substantially transcended ETI and its offsets, and the act was, in its final form, an omnibus business tax bill. Aside from ETI's repeal, AJCA's most prominent provisions were a new domestic production deduction equal to 9% of income from domestic (but not foreign) production, and a set of tax cuts for multinational firms, including more generous foreign tax credit rules governing interest expense. AJCA also temporarily extended the $100,000 small business expensing allowance (through 2007). The Tax Increase Prevention and Reconciliation Act of 2006 (TIPRA; P.L. 109-222 ) extended JGTRRA's reduced rates for dividends and capital gains for two years, through 2010. TIPRA also extended JGTRRA's $100,000 small-business expensing-allowance for two years, through 2009. (In early 2007, P.L. 110-28 extended the increased expensing allowance through 2010.) The Tax Relief and Health Care Act of 2006 (TRHCA; P.L. 109-432 ) was passed in the post-election session of the 109 th Congress. Many of the extenders had expired at the end of 2005, and TRHCA extended them, generally for two years (through 2007). The Small Business and Work Opportunity Tax Act of 2007 ( P.L. 110-28 ) continued Congress's long-standing interest in tax policy towards small business. Tax cuts for small business (increased business expensing and the work-opportunity tax credit) were included as a means of offsetting the extra cost burden the higher minimum wage. The Economic Stimulus Act of 2008 ( P.L. 110-185 ) contained two provisions which affect business investment; a temporary, one year increase in the limitations on the expensing of certain depreciable business assets and temporary "bonus" depreciation, for certain property acquired in 2008. Both provisions permit firms to deduct a greater percentage of the cost of property in the first year of service rather than gradually depreciating the whole value of the asset over time. The Food, Conservation, and Energy Act of 2008 ( P.L. 110-234 ) included tax-provisions which affect businesses were several tax credits for the production of fuels from alternative sources. The Emergency Economic Stabilization Act of 2008 ( P.L. 110-343 ) extended a number of business tax provisions and created or modified a number of renewable energy and energy efficiency provisions.

In 2009, congressional debate focused primarily on stimulating the economy, health care reform, and climate change. These issues are not only interrelated, but are also intimately linked with the taxation of businesses. For example, in February, Congress enacted the American Recovery and Reinvestment Act of 2009 (P.L. 111-5). Two of the act's business tax provisions provided for a temporary increase of small business expensing and temporary "bonus" depreciation limits, while other provisions allow a delayed recognition of cancelation of debt income and five-year carryback of net operating losses for small businesses. The act also modified several renewable energy provisions, including the Renewable Energy Production Tax Credit, the Investment Tax Credit, and tax credit for Alternative Fueling Property. Congressional debate in 2010 has focused on extending selected expired tax provisions and reforming health care. In particular, the Tax Extenders Act of 2009, H.R. 4213, passed the House on December 9, 2009, and the Senate on March 10, 2010. In addition, the debate on health care reform is ongoing and the President's Fiscal Year 2011 Budget Proposal calls for the modification of selected business taxes, the removal or restriction of several oil and gas tax provisions, and reforming international taxation. As the year progresses, it is anticipated that congressional deliberations will consider the extension of several expiring business tax provisions, energy taxation, tax shelters, and international taxation, while continuing to examine opportunities for economic stimulus.

President Obama's FY2014 budget request for Energy and Water Development was released in April 2013. The request totaled $34.9 billion. The Energy and Water Development bill includes funding for civil works projects of the U.S. Army Corps of Engineers (Corps), the Department of the Interior's Central Utah Project (CUP) and Bureau of Reclamation (Reclamation), the Department of Energy (DOE), and a number of independent agencies, including the Nuclear Regulatory Commission (NRC) and the Appalachian Regional Commission (ARC). FY2013 discretionary appropriations were considered in the context of the Budget Control Act of 2011 (BCA, P.L. 112-25 ), which established discretionary spending limits for FY2012-FY2021. The BCA also tasked a Joint Select Committee on Deficit Reduction to develop a federal deficit reduction plan for Congress and the President to enact by January 15, 2012. Because deficit reduction legislation was not enacted by that date, an automatic spending reduction process established by the BCA was triggered; this process consists of a combination of sequestration and lower discretionary spending caps, initially scheduled to begin on January 2, 2013. The "joint committee" sequestration process for FY2013 requires the Office of Management and Budget (OMB) to implement across-the-board spending cuts at the account and program level to achieve equal budget reductions from both defense and nondefense funding at a percentage to be determined, under terms specified in the Balanced Budget and Emergency Deficit Control Act of 1985 (BBEDCA, Title II of P.L. 99-177 , 2 U.S.C. 900-922), as amended by the BCA. For further information on the Budget Control Act, see CRS Report R41965, The Budget Control Act of 2011 , by [author name scrubbed], [author name scrubbed], and [author name scrubbed]. The American Taxpayer Relief Act (ATRA, P.L. 112-240 ), enacted on January 2, 2013, made a number of significant changes to the procedures in the BCA that will take place during FY2013. First, the date for the joint committee sequester to be implemented was delayed for two months, until March 1, 2013. Second, the dollar amount of the joint committee sequester was reduced by $24 billion. Third, the statutory caps on discretionary spending for FY2013 and FY2014 were lowered. For further information on the changes to BCA procedures made by ATRA, see CRS Report R42949, The American Taxpayer Relief Act of 2012: Modifications to the Budget Enforcement Procedures in the Budget Control Act , by [author name scrubbed] Pursuant to the BCA, as amended by ATRA, President Obama ordered that the joint committee sequester be implemented on March 1, 2013. The accompanying OMB report indicated a dollar amount of budget authority to be canceled to each account containing non-exempt funds. The sequester will ultimately be applied at the program, project, and activity (PPA) level within each account. Because the sequester was implemented at the time that a temporary continuing resolution was in force, the reductions were calculated on an annualized basis and will be apportioned throughout the remainder of the fiscal year. Although full year FY2013 funding has been enacted, the effect of these reductions on the budgetary resources that will ultimately be available to an agency at either the account or PPA level remains unclear until further guidance is provided by OMB as to how these reductions should be applied. Table 1 includes budget totals for energy and water development appropriations enacted for FY2007 to FY2014. Table 2 lists totals for each of the bill's four titles. The following tables present the requested FY2014 funding for the major programs included in the Energy and Water Development appropriations bills. Because of the uncertainty involved in the sequestration of FY2013 funding, the requested amounts are compared to the funding appropriated for FY2012. The present report is a preliminary survey of the proposed FY2014 Energy and Water Development appropriations. A more comprehensive report on the FY2014 appropriation will follow. For a detailed description of these programs, see the CRS Report R42498, Energy and Water Development: FY2013 Appropriations .

The Energy and Water Development appropriations bill provides funding for civil works projects of the Army Corps of Engineers (Corps), for the Department of the Interior's Bureau of Reclamation (Reclamation) and the Department of Energy (DOE), and for a number of independent agencies. FY2013 Energy and Water Development appropriations were considered in the context of the Budget Control Act of 2011 (BCA, P.L. 112-25), which established discretionary spending limits for FY2012-FY2021. On March 26, 2013, the President signed H.R. 933, the FY2013 Defense and Military Construction, and Veterans Affairs, Full Year Continuing Appropriations Act (P.L. 113-6). The act funds Energy and Water Development accounts at the FY2012 enacted level for the rest of FY2013, with some exceptions. However, under BCA, an automatic spending reduction process, consisting of a combination of sequestration and lower discretionary spending caps, went into effect March 1, 2013. The effect of these reductions on the budgetary resources that will ultimately be available to an agency at the account level remains unclear until further guidance is provided by OMB as to how these reductions should be applied. President Obama's FY2014 budget request for Energy and Water Development was released in April 2013. For FY2014, as in previous years, the level of overall spending will be a major issue. On March 21, 2013, the House passed H.Con.Res. 25, setting FY2014 spending at $2.77 trillion. On March 23, the Senate passed S.Con.Res. 8, with a spending level for FY2014 of $2.96 trillion. Allocations for individual appropriations bills have not yet been set by the Appropriations Committees. In addition to overall funding levels, issues specific to Energy and Water Development programs include the distribution of appropriations for Corps (Title I) and Reclamation (Title II) projects that have historically received congressional appropriations above Administration requests; alternatives to the proposed national nuclear waste repository at Yucca Mountain, NV, which the Administration has abandoned (Title III: Nuclear Waste Disposal); and proposed FY2014 spending levels for Energy Efficiency and Renewable Energy (EERE) programs (Title III) that are more than 50% higher in the Administration's request than the amount appropriated for FY2012. This report is a preliminary summary of funding levels requested by the Administration for FY2014. For detailed discussion of issues involved in individual programs, see CRS Report R42498, Energy and Water Development: FY2013 Appropriations.

The purpose of a credit report is to enable a creditor to determine whether a potential borrower/debtor is a good risk; the purpose of the Fair Credit Reporting Act (FCRA) is to ensure that information regarding a potential borrower/debtor is accurate and that procedures are in place to address and correct any inaccuracies. The FCRA establishes consumers' rights in relation to their credit reports and credit scores, as well as permissible uses of credit reports, disclosure requirements for credit reports and credit scores, and requirements for users of consumer credit reports and furnishers of information. The Fair and Accurate Credit Transactions Act of 2003 (FACT Act) amended the FCRA to include a number of provisions aimed at preventing identity theft and assisting victims. The Credit Card Accountability Responsibility and Disclosure Act of 2009 (Credit CARD Act) strengthened protections for young consumers and advertising disclosures regarding free credit reports from consumer reporting agencies. More recently, the Consumer Financial Protection Act of 2010, part of the Dodd-Frank Wall Street Reform and Consumer Protection Act (Dodd-Frank Act), established the Consumer Financial Protection Bureau (CFPB or the Bureau) and transferred administrative functions, including rulemaking and reporting, as well as certain enforcement functions, from other federal agencies such as the Federal Trade Commission (FTC) and the Federal Reserve Board, to the Bureau. The FCRA applies to the files maintained by "consumer reporting agencies," a term broadly defined to include anyone in the business of furnishing reports on the creditworthiness of consumers to third parties. Although the statute refers to "consumer reporting agencies" (CRAs), "credit reporting agencies" or "credit reporting bureaus" are synonymous with CRAs in popular usage. The terms "credit report" and "credit history" are similarly interchangeable in popular usage. A CRA "is essentially a clearinghouse for information supplied by credit grantors and collection agencies, and culled by the bureau itself from public records." In addition to several thousand small bureaus that often serve limited geographic areas, there are three major CRAs that operate on a nationwide basis--Experian, Equifax, and Trans Union. Information on a particular consumer may be maintained by any one or all of the CRAs serving a particular geographic area. Consumer credit reports generally include information about consumers' "credit worthiness [sic], credit standing, credit capacity, character, general reputation, personal characteristics, or mode of living." The FCRA explicitly excludes certain types of financial reports from the definition of a consumer report. For example, "any report containing information solely as to transactions or experiences between the consumer and the person making the report" is excluded from the definition of consumer report, as are communications of that information among persons related by common ownership or affiliated by corporate control. Authorizations or approvals of specific extensions of credit by the issuer of a credit card are also excluded from the definition of consumer report. With relatively few exceptions, there appears to be a consensus among the CRAs as to the types of information that should be included in a report. Information reported by a credit bureau commonly includes: identifying information, usually the individual's full name, Social Security number, address, telephone number, and spouse's name; financial status and employment information, including income, spouse's income, place, position, and tenure of employment, other sources of income, duration, and income in former employment; credit history, including types of credit previously obtained, names of previous credit grantors, extent of previous credit, and complete payment history; existing lines of credit, including payment habits and all outstanding obligations; public record information, including pertinent newspaper clippings, arrest and conviction records, bankruptcies, tax liens, and lawsuits; and finally a listing of bureau subscribers that have previously asked for a credit report on the individual. The FCRA limits the amount of time that adverse or negative information can be included in a consumer's credit report. Generally, a CRA is prohibited from reporting adverse information that is more than seven years old, or in the case of bankruptcies, more than ten years old. If a bankruptcy filed under title 11 of the United States Code is included on a consumer's report, the report shall also identify the chapter under which the case arose, if such information is provided by the source of the information. If a bankruptcy case or filing under title 11 of the United States Code is withdrawn by the consumer before a final judgment, the report must include the fact that the case or filing was withdrawn. In addition to adverse credit information, CRAs are also allowed to include information on a consumer's failure to pay overdue child support, if such information has been provided to the CRA by a state or local child support enforcement agency or verified by any state or federal government agency. This information remains on the consumer report for up to seven years. Medical information may be included in consumer reports under certain circumstances and if CRAs and creditors follow statutory and regulatory procedures and conditions to protect the confidentiality of such information. For the purpose of disclosure requirements under the FCRA, credit scores are defined as "a numerical value or a categorization derived from a statistical tool or modeling system used by a person who makes or arranges a loan to predict the likelihood of certain credit behaviors, including default (and the numerical value or the categorization derived from such analysis may also be referred to as a 'risk predictor' or 'risk score') . . . ." This definition excludes mortgage scores or ratings of an automated underwriting system that considers other factors in addition to credit information, such as the loan to value ratio, the amount of down payment, or the financial assets of a consumer, as well as other elements of the underwriting process or decision. A common misunderstanding is that there is a single credit score or perhaps a few scores, one generated by Fair, Isaac & Company (FICO), the firm that initially developed a credit score algorithm to evaluate and predict credit behavior by prospective borrowers/debtors, and one by each of the major credit reporting companies, Equifax, Experian, and TransUnion. However, many different algorithms/models may be developed to evaluate credit risk for different types of loans or other purposes, each including different factors or weighting the same factors differently. Additionally, aside from the major credit-score producers, there are other businesses generating and selling credit scores. Also, lender/creditors may develop their own in-house algorithms/models and generate their own scores rather than purchasing them from FICO, for example. These credit scoring algorithms/models and the credit scores generated by them constitute proprietary information of the firms developing them and/or the licensed users and retailers of such algorithms/models and the scores generated by them. According to the CFPB, several factors commonly are included in the calculation of a credit score: history for timeliness or delinquency in paying bills; number, types, available credit, current balances, and duration of credit accounts; percentage of available credit being used; recent credit activity such as applications for credit or opening new credit accounts; and existence and age of negative information, such as debt collection, foreclosure, or bankruptcy actions or other judgments or liens. A credit score represents a snapshot of a consumer's creditworthiness based on the credit report/history at the time the score was calculated. Therefore, it can change over time as a consumer's credit history continues to evolve. Different definitions of "good" and "bad" credit behavior and different uses of these attributes among scoring algorithms/models can affect the resulting score or range of scores produced with respect to a given consumer. Credit scores may be based partly on the information in a credit report and are used to evaluate creditworthiness. Therefore, the factors that may be used in calculating credit scores are subject to restrictions on credit reports under the FCRA, noted above, to the degree that they are derived from such reports, and are subject to prohibitions against discrimination under the Equal Credit Opportunity Act (ECOA). The ECOA prohibitions include discriminating against any credit applicant on the basis of race, color, religion, national origin, sex or marital status, or age (provided the applicant has the capacity to contract); because all or part of the applicant's income derives from any public assistance program; or because the applicant has in good faith exercised any right under the ECOA. As required by the Dodd-Frank Act, the Bureau issued a report in 2011 on the nature, range, and size of variations between credit scores sold to creditors and those sold to consumers by CRAs and whether such variations disadvantage consumers. The report summarized the types, uses, and FCRA disclosure requirements for credit scores and analyzed how a consumer could be adversely affected by the potential differences between an educational score purchased by the consumer and the actual score used by a prospective lender/creditor in determining whether to extend credit to the consumer or what the terms for credit will be. As noted above, there are various reasons for the differences among the scores that may be generated for a given consumer. All this is aside from any differences that may result from inaccuracies in the items comprising a credit report/history. A credit score purchased by a consumer that is different from the score purchased or generated by a lender/creditor could give the consumer a misleading impression of his/her creditworthiness. This could result in the consumer applying for a loan amount for which he/she will be denied, if the consumer-purchased score is more favorable than the one used by the lender/creditor. On the other hand, a consumer may be discouraged from applying for credit if a purchased score that is less favorable than the one generated by the algorithm used by the lender/creditor. The CFPB issued a follow-up report in 2012 that analyzed credit score variations over approximately 200,000 credit files from three nationwide CRAs, Equifax, Experian, and TransUnion, representing scores typically sold to consumers and to lender/creditors. The study concluded that for the majority of consumers "the scores produced by different scoring models provide similar information about the relative creditworthiness of the consumers. . . . For a substantial minority, however, different scoring models gave meaningfully different results." Because consumers cannot know in advance whether the score he/she has purchased will be significantly different from the score the lender/creditor will use, the study cautioned that consumers should be wary of relying solely on the scores they purchase in assessing their creditworthiness when determining whether to apply for credit and what terms to expect. The report further advised consumers to (1) be aware that many scores exist in the marketplace; (2) check credit reports for accuracy, taking advantage of the annual free credit report, and dispute any errors since these are the basis for credit scores; and (3) shop for credit, because even if lenders use the same score, they may offer different loan terms based on other factors, such as different competitive pressures or risk models. Finally, the report emphasized that providers of educational scores should make clear to consumers that there is a potential for differences, sometimes significant, between the scores they purchase and the ones a lender/creditor might use. The FCRA outlines the purposes for which a consumer credit report may be furnished to a requester. In general, a CRA may furnish a copy of a consumer's report to a person the CRA has reason to believe intends to use the information for the purpose of extending credit to the consumer or for reviewing or collecting the consumer's credit account. Consumer credit reports may also be issued where there is another "legitimate business need" for the information contained in the report in connection with a business transaction initiated by the consumer, or for purposes of reviewing an existing account to determine whether the consumer continues to meet the terms of the account. Reports may be furnished to executive branch departments and agencies in connection with the issuance of government-sponsored travel charge cards that are billed to employees. An insurer may receive a report in connection with the underwriting of an insurance policy involving the consumer for which the consumer has applied. Various other uses are permitted, including, among others, a response to a court order, a decision regarding a consumer's employment, and determination by a government agency of a consumer's ability to make child support payments. Reports may be issued in connection with transactions not initiated by the consumer only if authorized by the consumer, or if the transaction is a firm offer for credit or insurance and the consumer has not elected to have his name removed from lists provided by the CRA for this purpose. A consumer may elect to have his name removed from such lists by notifying the CRA that he does not consent to the release of reports for this purpose. If the consumer has not authorized the release of such reports and has not elected to have his name removed from the lists, the CRA may release only certain information about the consumer. Information released in connection with transactions not initiated by the consumer is limited to the name and address of the consumer, an identifier that is not unique to the consumer and that is used solely for the purpose of verifying the consumer's identity, and other information pertaining to the consumer that does not identify his/her relationship or experience with respect to a particular creditor or other entity. The Credit CARD Act of 2009 added protections from prescreened offers for persons under 21 years of age. Credit reports for such consumers cannot be issued in connection with such offers unless the consumer has consented. In addition to reports issued for the commercial purposes discussed above, a CRA may also issue a report to a person it has reason to believe "intends to use the information in connection with a determination of the consumer's eligibility for a license or other benefit granted by a governmental entity required by law to consider an applicant's financial responsibility or status." The FCRA also authorizes consumer credit reports to be released for certain legal purposes. Specifically, the act authorizes consumer credit reports to be released "in response to the order of a court having jurisdiction to issue such an order," or in response to "a subpoena issued in connection with proceedings before a Federal grand jury." Reports may also be issued to state or local child support enforcement agencies if needed to establish the consumer's capacity to pay child support or to determine the amount of such payments. If certain requirements are met, reports may also be issued for employment purposes. In order to obtain a report for employment purposes, the requester must certify that the report will not be used in violation of any state or federal law. The consumer must be told by the prospective employer that a report may be obtained and must consent to the procurement of a report by the employer. If the employer intends to take adverse action based in whole or in part on the report, the consumer must be provided with a copy of the report and a description of the rights afforded to consumers under the FCRA. A consumer report may also be issued to the Federal Deposit Insurance Corporation or the National Credit Union Administration as part of its powers, as conservator, receiver, or liquidating agent for an insured depository institution or insured credit union or in connection with the resolution or liquidation of a failed or failing insured depository institution or insured credit union. The FCRA outlines consumers' rights in relation to their credit reports and credit scores. Under the FCRA, consumers have the right to access all information in their credit reports, including the sources of the information, and the right to disclosure of their credit scores. A consumer may request one free credit report, not including a free credit score, each year from each of the nationwide CRAs. Pursuant to an amendment by the Credit CARD Act of 2009, advertisements for a free credit report in any medium, including television, radio, and the internet, must include a disclosure to the effect that free annual reports are available under federal law at "AnnualCreditReport.com" or other sources authorized by federal law and that the privately advertised service is not the free report required by law. Free reports may also be obtained under certain circumstances, such as notice of an adverse action based on information in a credit report or a consumer's request for a credit report in conjunction with a fraud alert. Absent one of these circumstances, a consumer may be charged up to $11.50 for additional copies of his or her credit report. Except in certain circumstances, a CRA may charge a fair and reasonable fee, as determined by the Bureau, for providing a consumer's current credit score or the one most recently calculated for an extension of credit. This paid disclosure must include a notice that the credit score purchased by the consumer may differ from a score purchased and used by a lender or other user of credit reports and scores. Certain mortgage lenders must disclose to a consumer without charge the credit score used for the purpose of the loan. Also, when users of credit reports take an adverse action or offer credit on terms less favorable than usual, they must disclose the credit score on which such actions were based. In addition to the disclosure of information contained in the consumer's credit report, a consumer is also entitled to receive information identifying each person who obtained a consumer credit report for employment purposes during the previous two years or for any other purpose during the previous year. Additional information that must be disclosed to the consumer upon request includes "the dates, original payees, and amounts of any checks upon which is based any adverse characterization of the consumer, included in the file at the time of the disclosure;" and "a record of all inquiries received by the agency during the one-year period preceding the request that identified the consumer in connection with a credit or insurance transaction that was not initiated by the consumer." Consumers have the right to dispute the completeness or accuracy of information contained in their files. Once a consumer notifies the CRA of the dispute, the CRA must reinvestigate and record the current status of the disputed information, or delete it from the consumer's file within 30 days. The CRA must also notify the furnisher of the disputed information of the consumer's dispute and provide the furnisher with all relevant information the CRA has received from the consumer regarding the dispute. In conducting the reinvestigation, the CRA must review and consider all relevant information submitted by the consumer. The CRA may terminate the reinvestigation if it reasonably determines that the dispute is frivolous or irrelevant, or if the consumer fails to provide sufficient information to investigate the disputed information. Should the CRA determine that the dispute is frivolous or irrelevant, it must notify the consumer of the determination not later than five business days after making such determination. If the reinvestigation leads to a determination that the disputed information is in fact inaccurate, incomplete, or unverifiable, the CRA must delete that item of information from the consumer's credit file. The CRA must provide written notice of the results of the reinvestigation to the consumer within five days of completing the reinvestigation. The notice must include a statement that the reinvestigation is completed; a copy of the consumer report reflecting the information in the consumer's file revised during the reinvestigation; a notice that, if requested by the consumer, a description of the procedure used to determine the accuracy and completeness of the information can be provided; a notice that the consumer has the right to add a statement to his/her file disputing the accuracy or completeness of the information contained therein; and a notice that the consumer has the right to request that the CRA send notices regarding deleted information to specified parties. Certain provisions of the FCRA are aimed at ensuring that the information in consumers' credit files is accurate and complete. As discussed above, under the FCRA, CRAs must conduct a reasonable reinvestigation if a consumer disputes the accuracy of any information in his/her file. The agencies also must notify requesters of consumer reports of any substantial discrepancies between the address the CRA has on file for a consumer and the consumer's address included in the request. In addition to their responsibilities related to the accuracy of information in consumers' files, credit reporting agencies must also ensure that consumer credit reports are released only for the purposes discussed above. In order to ensure that the reports are used for permissible purposes, the credit reporting agencies must require that the prospective users of the information identify themselves, certify the purposes for which the information is sought, and certify that the information will be used for no other purpose. CRAs also have a duty to notify furnishers of information in the files and users of consumer reports of their responsibilities under the FCRA. In addition to the general responsibilities discussed above, a CRA has responsibilities with regard to investigative consumer reports and reports provided for employment purposes. Prior to collecting information for or preparing an investigative consumer report, the CRA must disclose to the consumer the nature and scope of the requested investigation and the fact that such a report may be made. A CRA may not prepare or furnish an investigative consumer report unless it has received certification from the requesting party that the required disclosures have been made to the consumer. With regard to reports prepared for employment purposes, a CRA must take precautions to insure the accuracy of public record information that may be included in the report. The consumer must be notified that such information is being reported and be given the name and address of the person to whom the information is being reported; or the CRA must "maintain strict procedures designed to insure that whenever public information which is likely to have an adverse effect on the consumer's ability to obtain employment is reported it is complete and up to date." Many types of businesses and organizations contribute information to consumers' credit files. The major credit reporting agencies classify contributors of information into the following categories: automobile dealers; banks, clothing, department, and variety stores; finance agencies; grocery and home furnishing dealers; insurers; jewelry and camera stores; contractors; lumber, building materials, and hardware suppliers; medical-care providers; national credit card companies and airlines; oil companies (credit card divisions); personal services other than medical; mail-order houses; real estate agents; hotel keepers; sporting goods and farm and garden supply dealers; utilities; fuel distributors; government agencies (e.g. the Federal Housing Administration and the Veterans Administration); wholesalers; advertisers; and collection agencies. Generally, any person who has information related to a consumer's financial activities can report information about his or her transactions and experiences with the consumer to a CRA. However, a person or business with information about a consumer is not required to report that information to a CRA. If negative information is reported, the furnisher must notify the consumer in writing. Persons who furnish information to CRAs have a duty to provide accurate information. Under the FCRA, a furnisher may not provide any information relating to a consumer to a CRA if the person knows or has reasonable cause to believe that the information is inaccurate. Furnishers of information are also prohibited from providing information if the consumer has notified them that the information is inaccurate. Furnishers are also prohibited from providing information that the consumer reports as resulting from identity theft, unless the furnisher subsequently knows or is informed by the consumer that the information is correct. The FCRA requires furnishers of information to adopt reasonable procedures to prevent information resulting from identity theft from being refurnished after notification from a CRA that such information resulted from identity theft. In addition to the reinvestigation requirements imposed on CRAs, furnishers of information are also required to investigate disputed information. After a furnisher of information receives notice from a CRA regarding disputed information in a consumer report, the person furnishing the information must investigate and report the results to the CRA. If the furnisher finds that the information is incomplete or inaccurate, the furnisher must report those results to all other CRAs to which the incomplete or inaccurate information was furnished. Furnishers of information must also notify CRAs when an account is closed by the consumer, and when delinquent accounts are being placed for collection, charged to profit or loss, or subjected to any other similar action. The FCRA also allows consumers to dispute the accuracy of information directly with the furnisher. Furnishers must investigate the disputed information and report the results to the consumer within a specified period of time. If the information is found to be inaccurate, the furnisher must notify each CRA to which the information was originally furnished and provide the correct information. As noted above, consumer credit reports can be used only for the purposes specified in the FCRA. Despite these limitations, users of consumer credit reports vary widely. The most common users of consumer reports are credit grantors, such as credit card companies. Other common users include insurers, employers, collection agencies, and government agencies. The FCRA imposes specific requirements on persons who use consumer report information. Users of consumer reports must follow the requirements set forth in the FCRA if they take any adverse action with respect to any consumer that is based in whole or in part on any information contained in the consumer's report. If such action is taken, the user must provide the consumer with oral, written, or electronic notice of the adverse action. The notice must include the name, address, and telephone number of the CRA that furnished the report to the user; and a statement that the CRA did not take the adverse action and is unable to provide the consumer with specific reasons why the adverse action was taken. The consumer must be notified of his or her right to obtain a free copy of the consumer report from the CRA that furnished the report and of the consumer's right to dispute the accuracy or completeness of that report. The consumer must also be given written or electronic disclosure of a credit score used in any adverse action based in whole or in part on any information in the consumer report, including the range of credit scores, the factors adversely affecting the score, the date the score was created, and the provider of the credit score. A notice must also be provided by users who grant, extend, or otherwise provide credit on material terms that are materially less favorable than the most favorable terms available to a substantial proportion of consumers from or through that user. The notice must inform the consumer that the terms offered to the consumer were set based on information from a consumer report; identify the CRA that furnished the report; inform the consumer that he or she may obtain a free copy of the consumer report from that CRA; provide the contact information specified by the CRA for obtaining such reports; and provide the credit score used in deciding the credit terms, the range of credit scores, the factors adversely affecting the score, the date the score was created, and the provider of the credit score. The FCRA also imposes duties on users of consumer reports when reports are used in connection with a credit or insurance transaction not initiated by the consumer. Written solicitations made to consumers regarding credit or insurance transactions not initiated by the consumer must include a "clear and conspicuous statement" that information from the consumer's credit report was used in connection with the transaction; the consumer received the offer for credit or insurance because he or she satisfied specified criteria; and the credit or insurance may not be extended if, after the consumer responds to the offer, the consumer does not meet additional criteria used to determine creditworthiness or insurability. The statement must also inform the consumer of his or her right to prohibit information contained in his or her file from being used in connection with any transaction he or she did not initiate and how he/she may exercise this right. The FCRA includes a number of provisions aimed at preventing identity theft and assisting victims of identity theft. These provisions mirror laws passed by state legislatures and create a national standard for addressing consumer concerns with regard to identity theft and other types of fraud. They impose responsibilities on CRAs, furnishers of information, and users of consumer credit reports, and provide consumers with rights for protecting the information in their files and insuring that the information contained in them is accurate. Credit card issuers are required to follow certain procedures when they receive a request for an additional or replacement card within a short period of time following notification of a change of address for the same account. In a further effort to prevent identity theft, credit card account numbers must be truncated on electronically printed receipts, and, upon request, social security numbers must be truncated on credit reports provided to a consumer. Because hundreds of apparently frivolous lawsuits were being brought for willful noncompliance where the expiration date of a credit card was on a receipt although the number was truncated and there was no allegation of injury to consumers, a 2008 amendment to the FCRA clarified that the mere printing of the expiration date did not constitute willful noncompliance if the receipt otherwise complied with the FCRA. In United States v. Bornes , a recent U.S. Supreme Court case, the plaintiff alleged that the federal government violated the FCRA prohibition against printing the expiration date of a consumer's credit card on a receipt provided at the point of sale or transaction. The plaintiff/respondent had received electronic internet and email receipts displaying the expiration date of the personal credit card that he used to pay government filing fees for a client's lawsuit. The Court held that the Little Tucker Act, 28 U.S.C. 1346(a)(2), does not waive the sovereign immunity of the United States with respect to damages actions for violations of the FCRA. The Court remanded the case to the U.S. Court of Appeals for the Seventh Circuit to consider whether the FCRA itself waives the federal government's immunity. Consumers who have been victims of identity theft, or expect that they may become victims, can have fraud alerts placed in their files. A consumer may request a fraud alert from one CRA and that CRA is required to notify the other nationwide CRAs of the alert. In general, fraud alerts are to be maintained in the file for 90 days, but a consumer may request an extended alert which is maintained for up to seven years. The fraud alert becomes a part of the consumer's credit file and is thus passed along to all users of the report. The alert must also be included with any credit score generated using the consumer's file. In addition to the fraud alert, victims of identity theft may have information resulting from the crime blocked from their credit reports. After receiving proof of the consumer's identity, a copy of an identity theft report, the identification of the alleged fraudulent information, and a statement by the consumer that this particular information does not relate to any transaction he/she conducted, a CRA must block this particular information from being reported and must notify the furnisher of the information in question that it may be the result of identity theft. Requests to block information must also be referred to other CRAs. Victims of identity theft may request information about the alleged crime. A business entity is required, upon request and subject to verification of the victim's identity, to provide copies of application and business transaction records evidencing any transaction alleged to be a result of identity theft to the victim without charge or to any law enforcement agency investigating the theft and authorized by the victim to receive the records in question. Pursuant to FACT Act amendments in 2003, the federal agencies regulating the financial services industry promulgated guidelines and regulations, known as the Red Flags Rule, requiring financial institutions and creditors to establish reasonable policies and procedures to prevent identity theft. The Red Flags Rule had an effective date of January 1, 2008, and a mandatory compliance date of November 1, 2008, but the mandatory compliance date was delayed several times due in part to controversy over the scope of entities covered by the rule as creditors. The final mandatory compliance date was December 31, 2010, permitting time for Congress to enact the Red Flag Program Clarification Act of 2010, clarifying that creditors covered by the rule do not include businesses that advance funds for expenses incidental to the services they offer, such as lawyers, doctors, dentists, etc. Creditors subject to the rule are entities that "regularly and in the ordinary course of business" obtain credit reports in connection with credit transactions, furnish information to CRAs in connection with credit transactions, and extend credit based on an obligation to repay. Various proposals have been made in the 113 th Congress regarding regulating credit report information and use. H.R. 645 would restrict using credit report information for employment unless an employee's personal creditworthiness is relevant to employment responsibilities. H.R. 1002 / S. 471 would require CRAs to provide one free credit score a year to a consumer upon his or her request in addition to the free annual credit report that CRAs must currently provide to consumers. In addition, because lenders increasingly use credit scores as thresholds for loan eligibility as well as to determine appropriate loan terms, there has been interest in Congress in regulating how credit scores are calculated. For example, S. 160 would bar including certain medical debt in credit reports on the grounds that people generally do not intentionally incur medical or health care expenses but rather incur them through "no fault of the consumer" or by an "act of God." By restricting medical debt that has been in collection and subsequently paid or settled from being included in credit reports, S. 160 would effectively exclude such medical debt from credit score calculations. There are, however, several concerns with regulating credit reports and scores. First, because credit scores are calculated pursuant to proprietary formulae, requiring CRAs to provide free scores may amount to an unconstitutional taking of property in violation of the Fifth Amendment of the U.S. Constitution. While this concern was raised during Congress' consideration of the FACT Act provision requiring CRAs to provide free annual credit reports, courts do not appear to have resolved this issue yet. Second, a consumer does not have a single credit score. As noted above, creditor/lenders formulate or contract with third parties for credit score algorithms that reflect the creditor/lender's particular needs. As a consequence, consumers may have many credit scores, reflecting various algorithms that weigh factors differently. Thus, even if CRAs were statutorily required to provide a free credit score or even a range of free credit scores to consumers, these scores may not reflect the score that a creditor/lender actually uses to determine whether and under what terms to extend a loan to a consumer. Third, restricting or dictating how credit scores are formulated would arguably undermine a creditor/lender's ability to use credit scores to assess quickly a potential debtor/borrower's creditworthiness. While there may be legitimate concerns about credit score accuracy and fairness, limiting how creditor/lenders determine such scores precludes them from ascertaining risk factors that they deem relevant for assessing creditworthiness. Although a creditor/lender could always rely on the full credit report, a more detailed loan application, or interviews with the potential borrower/debtor, these alternatives could increase the creditor/lender's costs. In addition, dictating the content of proprietary formulas would set precedent for intervening legislatively in this type of financial product. Restricting certain items from appearing in credit reports would similarly affect the access of a creditor/lender to a complete and accurate picture of the creditworthiness of a debtor/borrower.

The purpose of the Fair Credit Reporting Act (FCRA) is "to require that consumer reporting agencies adopt reasonable procedures for meeting the needs of commerce for consumer credit, personnel, insurance, and other information in a manner which is fair and equitable to the consumer, with regard to the confidentiality, accuracy, relevancy, and proper utilization of such information." The FCRA establishes consumers' rights in relation to their credit reports, as well as permissible uses of credit reports. It also imposes certain responsibilities on those who collect, furnish, and use the information contained in consumers' credit reports. Additionally, it requires disclosure of credit scores in certain circumstances, including when adverse credit actions are based partly on a credit score. The FCRA has been amended several times over the last decade. The Fair and Accurate Credit Transactions Act of 2003 (FACT Act, P.L. 108-159) amended the FCRA to include a number of provisions aimed at preventing identity theft and assisting victims. The Credit Card Accountability Responsibility and Disclosure Act of 2009 (Credit CARD Act, P.L. 111-24) strengthened protections for young consumers and advertising disclosures regarding free credit reports from consumer reporting agencies. More recently, the Consumer Financial Protection Act of 2010, part of the Dodd-Frank Wall Street Reform and Consumer Protection Act (P.L. 111-203), established the Consumer Financial Protection Bureau (Bureau) and transferred administrative functions, including most rulemaking and reporting, as well as certain enforcement functions, from other federal agencies, such as the FTC and the Federal Reserve Board, to the Bureau. For more information on the functions of the new Bureau, see CRS Report R41338, The Dodd-Frank Wall Street Reform and Consumer Protection Act: Title X, The Consumer Financial Protection Bureau, by [author name scrubbed]. This report discusses consumers' rights under the FCRA, as well as the type of information included in credit reports and credit scores, permissible uses of credit reports, disclosure requirements for credit reports and credit scores, and requirements for users of consumer credit reports and furnishers of information. It also addresses FCRA provisions aimed at preventing identity theft and assisting victims of identity theft. For further information on laws and issues related to identity theft, see CRS Report R40599, Identity Theft: Trends and Issues, by Kristin M. Finklea, and CRS Report RL31919, Federal Laws Related to Identity Theft, by [author name scrubbed]. For information on data security and the legislative efforts regarding such, see CRS Report RL34120, Federal Information Security and Data Breach Notification Laws, by [author name scrubbed], and CRS Report RL33273, Data Security: Federal Legislative Approaches, by [author name scrubbed].

At the NATO Lisbon Summit (November 19-20, 2010), alliance heads of state approved a plan to build a territorial ballistic missile defense capability and integrate it with a U.S. initiative to deploy a European-based missile defense system. NATO officials stated that this new alliance capability, which has been under consideration for nearly a decade, is expected to cost approximately 200 million euros ($260 million), borne among all 28 member states, over the next 10 years. Other analysts, however, project a much higher cost. Congress has taken an active interest in missile defense, and there has largely been bipartisan support for the Bush and Obama Administrations' plans to guard against the threat of Iranian ballistic missiles through the deployment of radar and interceptors in Europe. NATO's adoption of such a capability, and its close integration with the U.S. Phased Adaptive Approach, also will likely raise several issues that Members of Congress may address, including command and control protocols, technology transfer, participation by Russia, and the extent to which European allies contribute to the common effort. This report provides background on this issue, including steps taken toward missile defense cooperation between the alliance and Russia. The United States has been developing missile defense systems for decades. The focus at the early stages of the Reagan Administration's program was to protect against nuclear-armed ballistic missiles from the Soviet Union. Over the past decade, the aim has been to neutralize the emerging ballistic missile threat from rogue states such as North Korea and Iran. In the case of the former, the Pentagon deployed interceptors in Alaska and California. In response to Iran's continued development of its ballistic missile program, the Bush Administration determined that a so-called "third site" should be established on the European continent, and in 2002 began informal discussions and consultations with NATO allied states in Central and Eastern European NATO allies. In addition, the Bush Administration sought to have a limited missile defense system endorsed by NATO and adopted as an alliance capability. In January 2007, the Bush Administration launched formal negotiations with Poland and the Czech Republic on a plan to deploy by 2013 a ground-based mid-course defense (GMD) element in Europe as part of the global U.S. Ballistic Missile Defense (BMD) capability. The system, intended to guard against a possible ballistic missile threat from Iran, would have included 10 interceptors in Poland, an X-band tracking radar in the Czech Republic, and another radar that would have been deployed closer to Iran. This proposed plan raised foreign policy challenges in Europe; some allies objected that the proposal unnecessarily provoked Russia, which strongly criticized the plan, while others indicated that Washington's bilateral approach undermined NATO solidarity. In mid-20008, the United States negotiated and signed agreements with Poland and the Czech Republic, but for various reasons those accords were not ratified by the end of the Bush Administration. In September 2009, based on new threat assessments, the Obama Administration announced plans to cancel the Bush plan and instead deploy a regional BMD capability in Europe. In the near term, this new system, called the Phased Adaptive Approach (PAA), would be based on the expansion of existing BMD sensors and interceptors, such as the Navy's Aegis BMD system. Although the Defense Department has expressed high confidence in the capabilities of existing systems such as the Aegis BMD, some observers remain skeptical about the prospective effectiveness of the PAA. The Administration states that the PAA will continue to evolve, and will be expanded over the next decade to include BMD capabilities against medium- and long-range Iranian ballistic missiles. The Administration also expressed hope that the PAA would be adopted by NATO as an alliance-wide BMD capability, and that Russia would play a role. The Romanian and Polish governments agreed to host facilities for the new system; plans currently call for the installation of land-based interceptors in the two countries by 2015 and 2018, respectively. Turkey has been mentioned as a possible site for U.S. missile defense radar. Russia, although initially positive over the cancellation of the Bush Administration's plan, later found reason to criticize the Obama plan, reviving the argument that it would compromise Russia's nuclear forces. Regarding possible NATO cooperation, Russian Foreign Minister Sergei Lavrov stated in January 2010 that Russia had "told the U.S. and NATO that it is necessary to start everything from scratch--to jointly analyze the origin and types of missile proliferation risks and threats." In the ensuing months, however, the Russian government appeared to take a more open stance toward the program. In addition, analysts maintain that eventual Russian acceptance of--and possible participation in--the PAA system would be an important consideration for some allied governments as they decided whether to accept adoption of an alliance territorial missile defense. Over the past decade, NATO has been considering two missile defense efforts, one tactical, the other strategic or territorial. The first, referred to as the Active Layered Theater Ballistic Missile Defense (ALTBMD), is designed to defend NATO-deployed forces against short- and medium-range ballistic missiles. This capability is expected to be fielded in several phases and will consist of lower- and upper-tier missile defense systems, battle management, communications, command and control and intelligence (BMC 3 I), early warning sensors and radars, and various interceptors. Individual NATO member states will provide the sensors and weapon systems, while NATO will develop the BMC 3 I component and integrate the various systems into a coherent, NATO-wide Theater Missile Defense (TMD) capability. NATO initiated ALTBMD feasibility studies in 2001. Alliance leaders then agreed to expedite work on a proposed system at the 2004 Istanbul Summit and later awarded the first major contract in 2006 to develop a TMD test bed in The Hague; this became operational in 2008. The test bed reportedly demonstrated the feasibility of integrating the various national systems and allowing NATO in June 2010 to agree to field an interim operational capability, which will provide military planners the tools to design, develop, and test for an optimal NATO ALTBMD capability. NATO expects the system to be operational by 2018. The alliance's deliberations concerning strategic or territorial missile defense have evolved more slowly. A feasibility study of NATO territorial missile defense was called for at the 2002 Prague Summit and was completed in 2005. In the final communique of their 2006 Riga summit, NATO leaders stated that the alliance study had concluded that long-range BMD is "technically feasible within the limitations and assumptions of the study," and called for "continued work on the political and military implications of missile defence for the Alliance including an update on missile threat developments." Missile defense proponents contended that the U.S. facilities intended for placement in Eastern Europe under the Bush Administration's plan would be a good fit--and therefore not inconsistent with--any future NATO missile defense system. However, other policymakers recommended that the establishment of any anti-missile system in Europe should proceed solely under NATO auspices rather than on a bilateral basis with just two NATO partners. A Bush Administration official declared that "the more NATO is involved in [GMD], the better." Some observers suggested that the Bush Administration chose not to work primarily through NATO because consensus agreement on the system was unlikely. However, in mid-June 2007, alliance defense ministers did agree to conduct a study of a complementary "bolt-on" anti-missile capability that would protect the southeastern part of alliance territory that would not be covered by the planned U.S. interceptors. Bush Administration officials interpreted the move as an endorsement of the U.S. plan and an adaptation of NATO capabilities to fit the proposed U.S. system. In addition, former NATO Secretary General Jaap de Hoop Scheffer stated "The roadmap on missile defense is now clear.... It's practical, and it's agreed by all." The Bush Administration hoped that NATO would adopt its missile defense as an alliance capability at its 2008 summit meeting, held April 2-4 in Bucharest, Romania. The Summit Declaration stated that the alliance acknowledged that ballistic missile proliferation poses an increasing threat. It further affirmed that missile defense is part of a "broader response," and that the proposed U.S. system would make a "substantial contribution" to the protection of the alliance. It declared that the alliance is "exploring ways to link [the U.S. assets] with current NATO efforts" to couple with "any future NATO-wide missile defense architecture." The declaration also directed the development, by the time of the 2009 summit, of "options" for anti-missile defense of any alliance territory that would not be covered by the planned U.S. installations. These options would be prepared "to inform any future political decision." In addition, the document declared support for ongoing efforts to "strengthen NATO-Russia missile defense cooperation," and announced readiness to look for ways to link "United States, NATO and Russian missile defense systems at an appropriate time." Finally, alliance members stated that they were "deeply concerned" over the "proliferation risks" implied by the nuclear and ballistic missile programs of Iran and North Korea, and called upon those countries to comply with pertinent UN Security Council resolutions. The Summit Declaration was interpreted as an endorsement of the Bush Administration's missile defense project; Secretary of State Condoleezza Rice hailed the statement as a "breakthrough document." Concerning the question of whether ballistic missiles from rogue states were a threat, National Security Advisor Stephen Hadley declared, "I think that debate ended today." Representative Ellen Tauscher, then Chair of the House Armed Services Subcommittee on Strategic Forces, welcomed "NATO's acknowledgment of the contribution that the long-range interceptor site could make to Alliance security" and to make "cooperation with NATO a cornerstone of its missile defense proposal." In the final communique of their December 3, 2008, meeting, the foreign ministers of NATO member states reiterated the language on missile defense that had been included in the earlier Bucharest Summit Declaration, while also noting "as a relevant development the signature of agreements by the Czech Republic and the Republic of Poland with the United States regarding those assets." The communique also called upon Moscow "to refrain from confrontational statements, including assertions of a sphere of influence, and from threats to the security of Allies and Partners, such as the one concerning the possible deployment of short-range missiles in the Kaliningrad region." The latter statement was likely included at Warsaw's insistence. However, as noted above, cooperation on missile defense with Russia has always been a key condition for some allies' support for a NATO-based missile defense system. NATO's 2009 summit was held in Strasbourg, France, and Kehl, Germany, in early April. The Summit Declaration "reaffirmed the conclusions of the Bucharest Summit about missile defence," but noted that more work should be done. Specifically, it recommended that "missile threats should be addressed in a prioritised manner" that addressed "the level of imminence of the threat and the level of acceptable risk." It tasked the Council in Permanent Session with studying and making recommendations on "architecture alternatives," including usage of the ongoing ALTBMD program. In December 2009, NATO foreign ministers commented favorably on the Obama Administration's revised missile defense plan, and reiterated the alliance's willingness to cooperate with Russia on the issue, stating that they reaffirmed "the Alliance's readiness to explore the potential for linking United States, NATO and Russian missile defence systems at an appropriate time. The United States' new approach provides enhanced possibilities to do this." The Russian media reported that NATO and Russia had formed a working group to study the issue. In a speech shortly thereafter, NATO Secretary General Anders Fogh Rasmussen said that he hoped the alliance and Russia would have a joint system by 2020. In March 2010, Rasmussen touted missile defense as an "opportunity for Europe to demonstrate again to the United States that the allies are willing and able to invest in our common defense." In July 2010, the NATO Secretary General stated that he hoped not only to have the Obama Administration's PAA adopted as an additional alliance capability, but also to have Russia participate with NATO in missile defense. Partnering with Russia would, in Rasmussen's words, "demonstrate that missile defence is not against Russia, but to protect Russia." In September, Russia was invited to attend the Lisbon summit meeting in November; Rasmussen indicated he hoped that cooperation on missile defense could be taken up by the NATO-Russia Council. Although some Russian officials continued to express misgivings about the U.S./NATO missile defense plans, on October 20, 2010, President Medvedev announced that he would attend the meeting in Lisbon. At their November 19-20 summit in Lisbon, NATO heads of state and government officially identified territorial missile defense as a core alliance objective, and adopted it as a NATO program in response to the threat of ballistic missile proliferation by potentially unfriendly regimes. Neither NATO's New Strategic Concept nor the Summit Declaration identify a particular state or region as a possible ballistic missile threat. Reports state that this omission was at the insistence of Turkey, which is seeking to maintain stable relations with Iran. The Summit Declaration stated that "Missile defence will become an integral part of our overall defence posture," and that the program will be "based on the principles of the indivisibility of Allied security and NATO solidarity, equitable sharing of risks and burdens, as well as reasonable challenge, taking into account the level of threat, affordability and technical feasibility, and in accordance with the latest common threat assessments agreed by the Alliance." It outlined the development of territorial missile defense through an expansion of the existing ALTBMD program and its integration with the U.S. Phased Adaptive Approach. As a first step, alliance leaders tasked NATO staff with developing "missile defence consultation, command and control arrangements" in time for a March 2011 Defense Ministers meeting. The next step is the drafting of an action plan for implementation of missile defense in time for a subsequent Defense Ministers session in June 2011. Missile defense also was highlighted in the alliance's new Strategic Concept, which revises its last iteration of 1999. The strategic blueprint identified ballistic missile proliferation as a "real and growing threat," and stated that protection of alliance territory against missile attack was "a core element of our collective defence...." It also expressed a determination to "enhance the political consultations and practical cooperation with Russia in areas of shared interests, including missile defence." In October 2010, Secretary General Rasmussen stated that the territorial missile defense plan would cost an estimated 200 million euros (about $260 million) over 10 years. This amount was characterized as an additional expenditure for upgrading the alliance's existing ALTBMD program, which is expected to cost approximately 800 million euros (approximately $1 billion) over 14 years. The outlays for both programs are to be borne among all 28 member states, and will be funded from the common NATO budget. In addition, individual countries will be responsible for supporting the deployment of their own ship- or land-based interceptors and sensors. However, in December 2010, a NATO-mandated industry advisory group reportedly concluded in an internal study that the cost could far exceed the early estimate. Inside the Army quoted the group's report as stating that "[w]hile NATO publicly envisages relatively benign cost for currently assumed territorial missile defence functionalities as add-on to the [existing theater-level missile defense] programme, it is obvious that a new, open [command-and-control] architecture approach will require a significant investment by NATO." The alliance, however, has not yet made public actual cost estimates. The Bush and Obama Administrations both actively sought NATO involvement in a common missile defense system, but both Administrations were willing to pursue such a program without NATO, as they judged the threat that would be posed by Iran acquiring a ballistic missile capability to be sufficiently serious to warrant such a step. After somewhat obliquely endorsing missile defense in successive summit declarations, NATO decided to adopt the system at the Lisbon summit. One former NATO official has argued that the alliance was responding to a fait accompli by the United States. He noted that the U.S. plan to deploy missile defense facilities was a unilateral initiative that would have provided protection to Europe, thereby presenting "a fundamental challenge to NATO, detracting from its overall responsibility for collective defense and raising acutely uncomfortable issues, such as the prospect of U.S.-commanded defenses operating in parallel with Article 5 defense of NATO." However, some analysts have also argued that significant positive factors help explain why alliance members were motivated to accept the proposal to develop a common missile defense system. Some of these arguments include: In a global environment in which more than 30 states possess or are seeking to acquire ballistic missiles, Europe would enjoy relatively low-cost protection from the security threat posed by rogue states. Cooperation would help strengthen transatlantic relations, particularly in the context of the contentious debate over the future of NATO's mission in Afghanistan. In a time when U.S. forces are being redeployed within and away from Europe and the presence of U.S. tactical nuclear weapons is being debated, territorial missile defense is a tangible symbol of the continued American commitment to the defense of the continent; this is particularly important for new member states. It is a natural step for NATO to proceed from defending deployed forces against missile attacks, as it currently does with ALTBMD, to protecting alliance populations and territory. NATO member state participation in a missile defense project has the potential to confer economic benefits, as European defense industries would gain from investment and technology-sharing. Missile defense opens an important potential avenue of cooperation with Russia. In a September 2010 speech in Rome, Secretary General Rasmussen cautioned against keeping Russia "outside the tent looking in," and urged the creation of an "inclusive missile defence system" that would "reinforce a virtuous circle" with regard to Moscow. Alternatively, observers have noted that the adoption of a missile defense capability may raise potential problems: Some have questioned whether or not territorial missile defense is indeed technologically feasible. Member states reportedly hold varying views about the effect that a missile defense system might have on the alliance's nuclear deterrence strategy. The French government, for example, initially was concerned "that missile defense would undermine France's nuclear posture." In the wake of the global financial crisis, spending constraints, particularly of European allies, may raise future burden sharing issues. Concerns have been expressed over command and control arrangements--particularly the degree to which Washington would exercise final say in the matter. Russia may reverse its support if it becomes convinced that the program could compromise the deterrent value of its own nuclear forces. The NATO-Russia Council (NRC) meeting, held in Lisbon in conjunction with the NATO summit, endorsed cooperation between the alliance and Moscow in the area of missile defense. The NRC Joint Statement declared that [w]e agreed to discuss pursuing missile defence cooperation. We agreed on a joint ballistic missile threat assessment and to continue dialog in this area. The NRC will also resume Theater Missile Defence Cooperation. We have tasked the NRC to develop a comprehensive Joint Analysis of the future framework for missile defence cooperation. The progress of this Analysis will be assessed at the June 2011 meeting of NRC Defence Ministers. The NATO-Russia accord did not constitute immediate full collaboration; rather, Russia approved the involvement of Russian technicians in the planning and development of the system. President Medvedev cautioned that missile defense cooperation must eventually amount to "a full-fledged strategic partnership between Russia and NATO." However, a State Department official emphasized that, although Russia would be involved in the program, the United States would "continue to reject any constraints or limitations on our missile defense plans." In a televised interview with Larry King, Prime Minister Putin indicated that if Russia perceives that the PAA/NATO missile defense program is compromising Moscow's nuclear deterrent, "Russia will just have to protect itself using various means, including the deployment of new missile systems to counter the new threats to our borders...." Analysts have argued that, despite its often-voiced reservations, Russia may have believed itself compelled to cooperate on missile defense; because Russia could "neither block the MD's [missile defense] emergence in Europe nor restrict its capacity by means of treaty constraints, the only way ... to influence its shape is to join the MD programme on as favourable terms as can possibly be snatched." On December 20, 2010, Russian Foreign Minister Lavrov indicated that Russian acceptance of and participation in NATO missile defense would be fundamental to the success of such a system--and for improved Russia-NATO relations. Although details as to how Russia might cooperate technologically remain to be seen, it is clear that NATO and the United States want to find ways to engage Russia in partnership on BMD. In an address to the nation on November 30, Russian President Medvedev buttressed his case for striking a deal with Washington on missile defense. The Russian leader emphasized that the absence of such an agreement might lead to a new arms buildup--one that a financially-strapped Russia could ill afford: "We will either come to terms on missile defense and form a full-fledged joint mechanism of cooperation or ... we will plunge into a new arms race and have to think of deploying new strike means, and it's obvious that this scenario will be very hard." A Russian political analyst noted that "we know that it was the arms race that led to the disintegration of the Soviet Union. ... Russia is not ready financially for a new arms race." Experts contend that several NATO member states will be able to contribute to the PAA, and that future cooperation would not be restricted simply to offering land for interceptors and radar. Allies will be able to provide air-, land- or sea-based platforms for sensors and for "shooters." Initially, for example, PAA will rely upon the U.S. Navy's sea-based Aegis Ballistic Missile Defense System, currently designed to take out short- and medium-range ballistic missiles. Some NATO member states have already deployed Aegis; for example, Spain has equipped four of its frigates with the U.S. Aegis combat system and associated SPY-1D radar, and has plans for building additional ships. Eventually, Aegis may be deployed aboard vessels of other NATO allies. In time, more advanced versions of the SM-3 interceptor missiles would be based on land; Poland and Romania have already agreed to host the interceptors, which can also be transported in the event that the source of threat changes location. Rather than using an X-Band radar sited in the Czech Republic, PAA envisions using radar and sensors placed in closer proximity to the threat. Some European NATO countries already have acquired their own BMD capabilities and have expressed varying degrees of interest in participating with other countries. For instance, Italy and Germany have partnered with the United States to develop and deploy MEADS (Medium Extended Air Defense System), a follow-on to the Patriot air and missile defense system. France, Italy, and the UK have joined together to develop an air and potential missile defense capability comparable to the Patriot system. The UK and Denmark have for years hosted U.S. missile early warning radars in their countries (Greenland, in Denmark's case). Germany, Spain, Greece and the Netherlands have purchased American Patriot missiles, and a Patriot battery is deployed in Poland until 2012. Several countries also participate in varying degrees with U.S. sea-based BMD efforts, such as the UK, Denmark, and the Netherlands. U.S. Aegis BMD is working with NATO's ALTBMD effort as well. The House FY2011 National Defense Authorization Act ( H.R. 5136 ) would place restrictions on the Administration's PAA comparable to those placed on the Bush plan. Among other things, H.R. 5136 would limit the procurement or deployment in Europe of U.S. defenses against medium- and long-range ballistic missiles until the Secretary of Defense certifies that the proposed technology is operationally effective and based on realistic flight testing. It would further limit the use of funds for BMD deployment until the host government has ratified any necessary agreements and until 45 days after Congress has received a report on alternative BMD systems for Europe required by the FY2010 National Defense Authorization Act ( P.L. 111-84 ). H.R. 5136 would also declare it to be U.S. policy that future versions of the Standard missile (SM), when deployed to protect Europe under the PAA, would also be able to intercept long-range ballistic missiles launched from Iran at the United States (Section 224). The House bill would also express the sense of Congress that the PAA is not restricted by New START, the U.S.-Russian treaty designed to reduce further the two sides' strategic offensive nuclear weapons. The Senate FY2011 National Defense Authorization Act ( S. 3454 ) similarly declares it the sense of Congress that a future version of the Standard missile be able to intercept long-range Iranian ballistic missiles launched at the United States. The bill also declares that New START imposes no restrictions on developing or deploying effective U.S. BMD systems. The Senate defense authorization bill was scheduled for floor debate in late November 2010. Senator Kyl proposed an amendment ( S.Amdt. 4634 ) that would set U.S. policy toward the Phased Adaptive Approach (PAA). This amendment could be viewed as complementing existing U.S. law (the National Missile Defense Act of 1999; P.L. 106-38 ; 113 Stat. 205; 10 U.S.C. 2431), which guides development and deployment of an effective national missile defense (NMD) against limited ballistic missile attacks on the territory of the United States. In general, S.Amdt. 4634 would largely support current Administration plans and objectives to evolve BMD coverage of NATO Europe and the United States over the course of this decade, as well as supporting associated U.S. arms control and foreign policy objectives. On December 22, 2010, the House and Senate Armed Services Committees approved a Joint Explanatory Statement, the practical equivalent of a conference report. The Explanatory Statement includes: the Senate provision that expresses the sense of Congress on BMD issues, particularly related to the European PAA; an amendment to the House provision clarifying that limits on the availability of funds for construction and deployment apply to land-based interceptors of the European PAA until any host nation approves the required basing and deployment agreements, and a provision granting a national security waiver authority to the Secretary of Defense regarding those limitations. The Statement further notes this provision is not intended to impede or delay the successful implementation of the European PAA, nor is it intended to limit the production of missile defense interceptors for ground- and flight-testing, or production validation; the House provision that limits funds for construction and deployment of the land-based portion of the European PAA until after Congress receives an independent assessment of the operational and cost-effectiveness of the PAA as required by P.L. 111-84 ; and a provision that authorizes a shared early warning program with the Czech Republic. President Obama signed the FY2011 National Defense Authorization Act ( H.R. 6523 ) into law ( P.L. 111-383 ) on January 7, 2011.

For several years, the United States and NATO have pursued parallel paths to develop a ballistic missile defense (BMD) capability to defend U.S. troops and European populations against potential ballistic attacks from countries such as Iran. At the November 2010 Lisbon Summit, alliance heads of state approved a plan to integrate existing NATO member BMD capabilities as part of the overall alliance defense posture. NATO officials have placed the estimated cost of the new territorial BMD system at 200 million euros (approximately $260 million), to be borne among all 28 member states over the next 10 years. Industry analysts, however, believe that the cost could be significantly higher. The Obama Administration's program to deploy a regional BMD capability in Europe, called the Phased Adaptive Approach (PAA), will now proceed with the NATO effort on an integrated basis. The Lisbon Summit agreement is significant in that NATO officials identified territorial missile defense as a core alliance objective and adopted a formal NATO program in response. The agreement further outlined the development of territorial missile defense through an expansion of NATO's ALTBMD (Active Layered Theatre Ballistic Missile Defense) program and its integration with the U.S. Phased Adaptive Approach. As a first step, alliance leaders tasked NATO staff "with developing missile defence consultation, and command and control arrangements" for NATO's March 2011 Defense Ministerial. The next step will be to draft an implementation plan for missile defense for the June 2011 Defense Ministers meeting. NATO decision makers took another significant step at Lisbon during the NATO-Russia Council (NRC) meeting, at which Russian President Dmitry Medvedev endorsed cooperation between the alliance and Moscow in the area of missile defense. Many observers believe that Russia's pledge to participate removes a major stumbling block to the development of a European territorial missile defense program. Analysts have noted the distinct advantages for NATO in adopting missile defense as a core alliance objective. Some of these include increased protection against potentially devastating ballistic missile attacks into Europe, strengthened relations with the United States, economic benefits that might flow from this effort, and opportunities to engage Russia constructively. Some have also questioned, however, whether this alliance effort is really necessary or whether such an effort is technologically feasible. Some are also concerned over the degree to which the United States will have command and control decision-making authority relative to others, and whether the combined NATO-U.S. programs might cause problems with how Russia views potential challenges to its own nuclear deterrent forces. Congress has taken an active interest in missile defense, and has largely given bipartisan support to the Bush and Obama Administrations' plans to guard against the threat of Iranian ballistic missiles through the deployment of radar and interceptors in Europe. NATO's adoption of such a capability, and its close integration with the U.S. Phased Adaptive Approach, also will likely raise several issues that Members of Congress may choose to address, including command and control protocols, technology transfer, participation by Russia, and the extent to which European allies contribute to the common effort. This report may be updated as necessary.

Health Savings Accounts (HSAs) are one way people can pay for unreimbursed medical expenses (deductibles, copayments, and services not covered by insurance) on a tax-advantaged basis. HSAs can be established and funded by eligible individuals when they have a qualifying high-deductible health plan (HDHP, i.e., high-deductible insurance) with a deductible in 2012 of at least $1,200 for self-only coverage and $2,400 for family coverage. Qualifying HDHPs must also limit out-of-pocket expenses for covered benefits to certain amounts. With some exceptions, eligible individuals cannot have other health insurance coverage. HSA tax advantages can be significant for some people: contributions are deductible (or excluded from income that is taxable if made by employers), withdrawals are not taxed if used for medical expenses, and account earnings are tax-exempt. Unused balances may accumulate without limit. HSAs were first authorized in the Medicare Prescription Drug, Improvement, and Modernization Act of 2003 (MMA, P.L. 108-173 ). However, other tax-advantaged accounts for health care expenses have existed for some time. Flexible Spending Accounts (FSAs), which many employees can use, began spreading in the 1980s once the Internal Revenue Service (IRS) established clear guidelines. Archer Medical Savings Accounts (MSAs), a precursor of HSAs, became available for a limited number of people starting in 1997. Health Reimbursement Accounts (HRAs), made available by some employers, were approved for tax-exempt status in 2002. For an overview of the similarities and differences of these accounts, see CRS Report RS21573, Tax-Advantaged Accounts for Health Care Expenses: Side-by-Side Comparison , by [author name scrubbed]. Also see Internal Revenue Service publication 969, Health Savings Accounts and Other Tax-Favored Health Plans. When coupled with high-deductible health plans, these accounts are part of what some call "consumer-driven health plans." One objective of these plans is to encourage individuals and families to set money aside for their health care expenses. Another is to give them a financial incentive for spending health care dollars prudently. Still another goal is to give them the means to pay for health care services of their own choosing, without constraint by insurers or employers. Since HSAs are still relatively new, the extent to which they will further these objectives is not yet known with any assurance, notwithstanding some early data. However, many individuals and employers are interested in HSAs, and additional information about them is emerging continuall. This report provides a summary of the principal rules governing HSAs, covering such matters as eligibility, qualifying health insurance, contributions, and withdrawals. It will be updated as the rules change, either by legislation or regulatory action. Rules governing HSAs are laid out primarily in Section 223 of the Internal Revenue Code and guidance issued by the Department of the Treasury and the IRS. Section 223 of the Code was enacted by the Medicare Prescription Drug, Improvement, and Modernization Act of 2003 ( P.L. 108-173 , Section 1201(a)). The section has been amended three times: first by the Gulf Opportunity Zone Act of 2005 ( P.L. 109-135 , Section 404(c)); second by the Tax Relief and Health Care Act of 2006 ( P.L. 109-432 ); and finally by the Patient Protection and Affordable Care Act (PPACA; P.L. 111-148 ). HSAs are affected by other rules as well. For example, whether an expenditure is a qualified medical expense is governed by Section 213(d) of the Internal Revenue Code and IRS guidance on it; aside from exceptions pertaining to the purchase of health insurance, Section 223 does not change these rules. The summaries of the principal HSA rules that follow do not provide all details or cite supporting documentation. Further information might be obtained by referring to the statutory provisions cited above, to IRS and other government publications, or to a growing body of secondary analyses. An HSA is a tax-exempt trust or custodial account established for paying qualified medical expenses of the account beneficiary. Accounts may be established with banks and insurance companies or with other entities approved by the IRS to hold Individual Retirement Accounts (IRAs) or MSAs. In addition, other entities may request approval to be an HSA trustee or custodian. Insurance companies that offer qualified high-deductible health plans (HDHPs) often also establish HSAs for the policyholders. However, there is no federal requirement that HSAs be established by the entity that provides the health plan. Individuals interested in establishing an HSA must locate an entity that accepts the accounts; they cannot simply deem an ordinary savings account to be an HSA. Individuals are eligible to establish and contribute to an HSA if they have a qualifying HDHP and no disqualifying coverage, as discussed under the next two headings. Whether someone has a qualifying HDHP is determined as of the first of each month; thus, a person might be eligible to contribute to an HSA in some months but not others. For example, if someone first enrolled in an HDHP on September 15, their HSA eligibility period would begin on October 1 of that year. Individuals cannot be enrolled in Medicare (a form of disqualifying coverage), which generally occurs at age 65. They cannot have received Veterans Administration medical benefits (another form of disqualifying coverage) within the past three months, other than benefits for preventive care or from disregarded coverage (for the latter, see exceptions to disqualifying coverage in the section on " What Is Disqualifying Coverage? "). On the other hand, individuals can be eligible even if they have access to free or reduced price health services at an on-site employer clinic, provided the clinic does not offer significant benefits. Individuals are not eligible if they may be claimed as a dependent on another person's tax return. Tax dependency is determined on a yearly basis; this might not be known until the end of the year. Individuals may keep their HSAs once they become ineligible. Thus, individuals do not lose their HSA (or the right to access it) by turning age 65 or by obtaining insurance with a low deductible. However, they could not make contributions until they become eligible once again. Individual members of a family may have their own HSAs, provided they each meet the eligibility rules just described. They can also be covered through the HSA of someone else in the family; for example, a husband may use his HSA to pay expenses of his spouse whether or not she has qualifying coverage and whether or not she has her own HSA. The husband might use his HSA to pay the spouse's expenses even if she has disqualifying coverage. Individuals may have more than one HSA account. A health plan must meet several tests to be qualified: it must have a deductible above a certain minimum level, and it must limit out-of-pocket expenditures for covered benefits to no more than a certain maximum level. These two tests are described immediately below. In addition, a qualifying health plan must provide general coverage: substantially all of its coverage cannot be through what the statute calls "permitted insurance" (e.g., coverage for only a particular disease) or certain other coverage (e.g., vision care). This rule prevents individuals from making HSA contributions when the only insurance they have is high-deductible coverage for a narrow class of benefits. (More details on permitted insurance and these other forms of coverage are provided under the heading " What Is Disqualifying Coverage? ".) For self-only coverage, the annual deductible in 2012 must be at least $1,200; for family coverage, it must be at least $2,400. These amounts will be adjusted for inflation (rounded to the nearest $50) in future years. Only usual, customary, and reasonable charges for covered benefits are taken into account in determining whether deductibles are met. Premiums are not included in meeting the deductible, though copayments may be at the option of the HDHP. The minimum deductible requirement does not apply to preventive care. The exception is established in the statutory language, which does not define the term. However, IRS regulations provide that preventive care includes but is not limited to periodic health evaluations (including tests and diagnostic procedures ordered in connection with routine examinations), routine prenatal and well-child care, immunizations, tobacco cessation programs, obesity weight-loss programs, and various screening services. Drugs and medications can be included when taken by a person who has developed risk factors for a disease, or to prevent its recurrence. In general, preventive care does not include services or benefits intended to treat existing illnesses, injuries, or conditions; an exception is allowed when the treatment is incidental to the preventive care service and it would be unreasonable or impracticable to perform another service. Prescription drugs are not exempt from the minimum deductible, whether they are treated like other benefits in the high-deductible insurance plan or have different deductibles and copayment requirements. Prescription or other discount cards do not disqualify individuals from meeting the minimum deductible requirement. Similarly, individuals are not disqualified by coverage under an employee assistance program, disease management program, or wellness program, provided the program does not provide significant benefits in the nature of medical care or treatment. For self-only coverage, the annual limit on out-of-pocket expenditures for covered benefits must not exceed $6,050 in 2012. For family policies, the limit must not exceed $12,100. These amounts will be adjusted for inflation (rounded to the nearest $50) in future years. These limits should not be interpreted as ceilings on all out-of-pocket expenditures for health care. Premiums for the HDHP and other insurance would be extra, as would payments for benefits not covered by insurance. Even for covered benefits, the limits would apply only to payments for usual, customary, and reasonable charges. On the other hand, both deductibles and copayments must be taken into account in determining whether the limits are exceeded. The out-of-pocket limit rule does not preclude HDHPs from imposing reasonable lifetime limits (for example, $1 million) on plan benefits. While covered by a qualifying HDHP, individuals generally must not have other coverage that is not high deductible and that provides coverage for any benefit under their high-deductible plan. For example, individuals with a qualifying HDHP are not eligible to establish or contribute to an HSA if they are also covered under a spouse's low deductible policy for the same benefits. (If the spouse's policy were high deductible, the individual could contribute to his or her own HSA.) However, eligible individuals may have "permitted insurance," which is insurance under which substantially all coverage relates to liabilities incurred under workers' compensation laws, tort liabilities, or liabilities related to ownership or use of property (such as automobile insurance); insurance for a specified disease or illness; or insurance that pays a fixed amount per day or other period of hospitalization. In addition, eligible individuals may have coverage (through insurance or otherwise) for accidents, disability, vision care, dental care, or long-term care. As mentioned above, the permitted insurance and other coverage described here do not provide the general form of coverage to be considered a qualifying health plan for purposes of HSA eligibility. Eligible individuals may also have Flexible Spending Accounts and Health Reimbursement Accounts, provided these accounts are for limited purposes (for example, dental services or preventive care), provide reimbursement for services covered by the HDHP only after the qualifying deductible is met, or are used in retirement. However, coverage under any Flexible Spending Account is allowed during the account's 2 1/2-month grace period after the end of the year (leeway, which employers may allow), provided the balance in the account is zero or is transferred to the HSA. Contributions to HSAs may be made by eligible individuals, as well as by other individuals or entities on their behalf. Thus, individuals may contribute to accounts of eligible family members, and employers may contribute to accounts of eligible employees. Contributions can also be made by state governments. Contributions by one individual or entity do not preclude contributions by others, provided that the total of all contributions (aside from those classified as rollover contributions) does not exceed annual contribution limits. Contributors cannot restrict how HSA funds are to be used. For example, employers may not limit HSAs just to certain medical expenses (let alone just to medical expenses alone), even for funds they contribute. Account owners always can make withdrawals for any purpose, though nonqualified withdrawals are subject to taxation, as discussed below. Contributions to HSAs may be made at any time during a calendar year and until the filing date (without extensions) for federal income tax returns, normally April 15 of the following year. Thus, contributions could occur over a 15 1/2 month time span (e.g., from January 1, 2012, through April 15, 2013), provided they do not exceed the allowable annual limit described below. HSA contributions may be made through cafeteria plan salary reduction agreements, that is, benefit arrangements established by employers under which employees accept lower take-home pay in exchange for the difference being deposited in their account. The IRS has determined that salary reduction agreements must allow employees to stop or increase or decrease their HSA contributions throughout the year as long as the changes are effective prospectively; however, employers may place restrictions on these elections if they apply to all employees. The IRS has also determined that these agreements allow employers to contribute amounts to cover medical expenses that exceed employees' current HSA balances (subject to maximum amounts the employees had elected to contribute), provided the employees repay the accelerated contributions before the end of the year. Individuals may make one-time contributions to their HSAs from their traditional or Roth individual retirement accounts (IRAs), subject to the annual contribution limits described below, and limited, one-time rollovers from balances in each of their Flexible Spending Accounts and Health Reimbursement Accounts, which are not subject to those limits. Contributions to HSAs must be made in cash; contributions of property are not allowed. Two types of contributions may be made to HSAs, regular and catch-up. Both have annual limits that are calculated on a monthly basis: for each month during the year when individuals are eligible, they may contribute (or have others contribute on their behalf) up to one-twelfth of the applicable annual limit. For example, an individual who is eligible for January through July could contribute seven-twelfths of the annual limit for that year. However, individuals who are eligible during the last month of the year are treated as if they were eligible for the entire year, thus allowing them to contribute up to the annual limit. Contributions need not actually occur monthly; one contribution can be made for the entire year, provided it does not exceed the sum of the allowable monthly limits. The annual contribution limit in 2012 for self-only coverage is $3,100. The annual limit for family coverage is $6,250. The limits will be adjusted for inflation (rounded to the nearest $50) in future years. In the case of a married couple, if one spouse has family insurance coverage both will be treated as if they have only that coverage; the monthly contribution limit will be divided equally between them unless they agree on a different division. These contributions may be made by individuals who are at least 55 years of age but not yet enrolled in Medicare. In 2012, they may contribute an additional $1,000. This amount is not indexed for inflation. Account owners may rollover balances from one HSA to another without being restricted by the annual contribution limits or affecting new contributions. If the owner withdraws funds and deposits them in another account, only one rollover is allowed each year. Deposits must be made within 60 days in order for the transfer to be considered a rollover. If instead an HSA trustee transfers funds to another, there is no limit on the number of rollovers allowed each year. HSA trustees are not obligated to accept either owner or trustee rollovers. One-time, limited rollovers are also allowed of termination balances in Flexible Spending Accounts and Health Reimbursement Accounts. The rollovers must be made by employer transfers. The annual limitations just described are reduced by the amount of any contribution individuals make to their MSAs in the same year. (MSAs are precursors to HSAs that were authorized under the Health Insurance Portability and Accountability Act of 1996, P.L. 104-191 . Eligibility was limited to people who either were self-employed or were employees covered by a high-deductible insurance plan established by employers with 50 or fewer workers.) Individuals are permitted to rollover MSA balances to their Health Savings Accounts. Contributions exceeding annual limits might occur for a number of reasons, including failure of employees to take account of employer contributions, early deposits that incorrectly anticipated continuing eligibility, and mathematical errors. If an excess contribution and any earnings on it are withdrawn by the filing date (without extensions) for the federal income tax return for the year, the individual will not be subject to a penalty. Otherwise, the excess contribution will be subject to a 6% excise tax each year until it is withdrawn. Employers are not required to contribute to employees' HSAs, but if they do the contributions must be comparable. Generally, contributions must be the same dollar amount or the same percentage of the HDHP annual deductible, adjusted to reflect the proportion of the year the employees have worked. Varying employer matching contributions (which might differ by how much an employee puts in) satisfy the comparability requirement only if employee contributions are made through a cafeteria plan. If employers allow some employees to transfer Flexible Spending Account or Health Reimbursement Account balances to their HSAs, they must allow any eligible individual covered under their HDHPs to do so. Employers may accelerate part or all of their contributions for employees who have incurred qualified medical expenses that exceed the employer's cumulative contributions to that point in the year. Accelerated contributions must be available on an equal and uniform basis to all eligible employees. Employers may limit contributions just to employees who participate in the employers' HDHPs; however, if they make contributions to employees who participate in other HDHPs they must make comparable contributions to all employees with HDHPs. Different treatment is allowed for full-time and part-time employees, and for self-only and several types of family coverage. Larger contributions may be made for non-highly compensated employees than for highly compensated employees (as defined by the Internal Revenue Service). Employees covered by collective bargaining agreements may be disregarded. The comparability requirement does not apply to HSA contributions to people who are not considered "employees," including independent contractors, partners in a partnership, and sole proprietors. Individuals who contribute to their HSAs may claim a deduction on their federal income tax. The deduction is "above-the-line," that is, it is made in determining adjusted gross income; it may be taken by all taxpayers, even those who claim the standard deduction instead of itemizing deductions. No deduction may be claimed for a one-time contribution from an IRA (though the IRA distribution is not taxed, as it otherwise might be) or for rollovers from MSAs, other HSAs, or a Flexible Spending Account or Health Reimbursement Account. Contributions made by employers are excluded from gross income of employees in determining their income tax liability. In addition, employer contributions are exempt from Social Security and Medicare taxes for both employers and employees. In addition, employer HSA contributions are exempt from federal unemployment insurance taxes. If employees contribute to their HSAs through salary reduction cafeteria plans, the contributions are considered to be made by the employer and are exempt from these three employment taxes. State income taxes generally follow federal rules with respect to deductions and exclusions. However, some states may elect different treatment. Withdrawals from HSAs are exempt from federal income taxes if used for qualified medical expenses described in Section 213(d) of the Internal Revenue Code, except for health insurance. Beginning in 2011, over-the-counter medications that are not prescribed by a physician are no longer considered a qualified medical expense. While payments for health insurance are considered qualified expenses under Section 213(d), they generally are not qualified for purposes of HSAs withdrawals. Thus, accounts cannot be used to pay some or all of the premiums of the associated HDHP. However, payments for four types of insurance are considered to be qualified HSA expenses: (1) long-term care insurance, (2) health insurance premiums during periods of continuation coverage required by federal law (e.g., COBRA), (3) health insurance premiums during periods the individual is receiving unemployment compensation, and (4) for individuals age 65 years and older, any health insurance premiums (including Medicare Part B premiums) other than a Medicare supplemental policy. Withdrawals not used for qualified medical expenses are included in gross income in determining federal income taxes and are subject to a penalty. Beginning in 2011, the penalty will be 20% (raised from 10% in prior years). The penalty is waived in cases of disability or death and for individuals age 65 and older. There is no requirement, as there is for qualified retirement plans, that individuals begin to spend down account balances at a certain age. There is no time limit on when HSA withdrawals are made to pay (or reimburse payments for) qualified expenses, provided adequate records are kept. However, HSAs may not be used to pay expenses incurred before the HSA was established. HSA withdrawals are not subject to nondiscrimination provisions applying to self-insured medical reimbursement plans. If a surviving spouse is the designated beneficiary of an HSA, it becomes an HSA for that widow or widower. If someone other than a surviving spouse is the designated beneficiary, the HSA is terminated as of the date of death and the fair market value becomes taxable income to that person. If there is no designated beneficiary, the remaining assets become part of the estate and the fair market value becomes taxable income to the deceased individual on the final return. In these instances, amounts included in gross income are reduced by qualified expenses incurred by the deceased before death and paid within one year. The IRS has proposed model forms that banks, insurance companies, and other approved entities can use as trust or custodial agreements with eligible individuals. The proposed agreements, which are not mandatory, provide a safe harbor definition of these institutions' responsibilities. Among other things, the proposed forms clarify that trustees and custodians may rely on account owners' representations about their age, that they are covered by a HDHP, and that their contributions do not exceed the maximum allowed. In addition, the proposed forms state that trustees and custodians are not responsible for determining whether distributions are used for medical expenses. HSA funds may be invested in investments approved for IRAs, such as bank accounts, annuities, certificates of deposit, stocks, mutual funds, and bonds. However, trustees and custodians need not make available all of these options. There is no requirement that funds be invested in vehicles that do not lose value. HSA funds may not be invested in life insurance contracts or most collectibles (i.e., tangible property). Administration and account maintenance fees may be withdrawn from the HSA (in which case they will not be considered taxable income) or paid separately (in which case they will not be taken into account with respect to contribution limits). Trustees and custodians may place reasonable restrictions on the frequency and minimum amount of HSA distributions. The Employee Retirement Income Security Act (ERISA) establishes requirements for employee benefit plans. Among other things, it establishes reporting, disclosure, and fiduciary standards for employers, superseding state laws on these matters. Benefit plans with minimal employer involvement are exempted. The U.S. Department of Labor (DOL) has determined that HSAs generally will not be considered ERISA plans, even if employers open and make contributions to the employees' accounts, provided employer involvement is otherwise limited. For the exemption to apply, employers must not limit employees' ability to move funds to another HSA, impose additional conditions on using HSA funds, make or influence investment decisions regarding HSAs, represent that HSAs are employee welfare benefit plans established by the employer, or receive any payment or compensation in connection with HSAs. The DOL has also determined that certain cash contributions offered by HSA trustees or custodians as an incentive to establish an HSA are not a prohibited transaction under ERISA.

Health Savings Accounts (HSAs) are one way people can pay for unreimbursed medical expenses (deductibles, copayments, and services not covered by insurance) on a tax-advantaged basis. HSAs can be established and funded by eligible individuals when they have a qualifying high-deductible health plan and no other health plan, with some exceptions. For 2012, the deductible for self-only coverage must be at least $1,200 (with an annual out-of-pocket limit not exceeding $6,050); the deductible for family coverage must be at least $2,400 (with an annual out-of-pocket limit not exceeding $12,100). The annual HSA contribution limit in 2012 for individuals with self-only coverage is $3,100; for family coverage, it is $6,250. Individuals who are at least 55 years of age but not yet enrolled in Medicare may contribute an additional $1,000. The tax advantages of HSAs can be significant for some people: contributions are deductible (or excluded from income that is taxable if made by employers), withdrawals are not taxed if used for medical expenses, and account earnings are tax-exempt. Unused balances may accumulate without limit. HSAs and the accompanying high-deductible health plans are one form of what some call "consumer-driven health plans." One objective of these plans is to encourage individuals and families to set money aside for their health care expenses. Another is to give them a financial incentive for spending health care dollars prudently. Still another goal is to give them the means to pay for health care services of their own choosing, without constraint by insurers or employers. Since HSAs are still relatively new (they have been authorized for less than six years), the extent to which they will further these objectives is not yet known with any assurance, notwithstanding some early data. This report is limited to a summary of the principal rules governing HSAs, covering such matters as eligibility, qualifying health insurance, contributions, and withdrawals. The major changes to HSAs in 2011 were a result of provisions in the Patient Protection and Affordable Care Act (PPACA). These include changes to the definition of qualified expenses and increases to the penalty for distributions for non-qualified expenses. These are discussed in greater detail in this report. This report will be updated as the rules change, either by legislation or regulatory action.

Since 1995, at least thirty-one states have enacted laws banning the so-called "partial-birth" abortion procedure. Although many of these laws have not taken effect because of permanent injunctions, they remain contentious to both pro-life advocates and those who support a woman's right to choose. The concern over partial-birth abortion has been shared by Congress. Congress passed bans on the partial-birth abortion procedure in both the 104 th and 105 th Congresses. Unable to overcome presidential vetoes during both congressional terms, the Partial-Birth Abortion Ban Act was reintroduced in each successive Congress until its enactment in 2003. S. 3 , the Partial-Birth Abortion Ban Act of 2003, was passed by Congress in October 2003. The measure was signed by the President on November 5, 2003. The U.S. Supreme Court has also addressed the performance of partial-birth abortions. In Stenberg v. Carhart , a 2000 case, the Court invalidated a Nebraska statute that prohibited the performance of such abortions. Prior to this decision, the U.S. Courts of Appeals remained divided on the legitimacy of state statutes banning partial-birth abortions. In Gonzales v. Carhart , a 2007 case, the Court upheld the Partial-Birth Abortion Ban Act of 2003, finding that, as a facial matter, it is not unconstitutionally vague and does not impose an undue burden on a woman's right to terminate her pregnancy. This report discusses the Court's decisions and the partial-birth abortion measures in the 106 th , 107 th , and 108 th Congresses. The Supreme Court has held that a woman has a constitutional right to choose whether to terminate her pregnancy. Although a state cannot prohibit a woman from having an abortion, it can promote its interest in potential human life by regulating, and even proscribing, abortion after fetal viability so long as it allows an exception for abortions that are necessary for the preservation of the life or health of the mother. In Planned Parenthood of Southeastern Pennsylvania v. Casey , the Court expanded a state's authority to regulate abortion by permitting regulation at the pre-viability stage so long as such regulation does not place an "undue burden" on a woman's ability to have an abortion. The term "partial-birth abortion" refers generally to an abortion procedure where the fetus is removed intact from a woman's body. The procedure is described by the medical community as "intact dilation and evacuation" or "dilation and extraction" ("D & X") depending on the presentation of the fetus. Intact dilation and evacuation involves a vertex or "head first" presentation, the induced dilation of the cervix, the collapsing of the skull, and the extraction of the entire fetus through the cervix. D & X involves a breech or "feet first" presentation, the induced dilation of the cervix, the removal of the fetal body through the cervix, the collapsing of the skull, and the extraction of the fetus through the cervix. This report uses the term "D & X" to encompass both procedures. D & X is one of several abortion methods. The principal methods of abortion are suction curettage, induction, and standard dilation and evacuation ("D & E"). The decision to perform one abortion method over another usually depends on the gestational age of the fetus. During the first trimester, the most common method of abortion is suction curettage. Suction curettage involves the evacuation of the uterine cavity by suction. The embryo or fetus is separated from the placenta either by scraping or vacuum pressure before being removed by suction. Induction may be performed either early in the pregnancy or in the second trimester. In this procedure, the fetus is forced from the uterus by inducing preterm labor. D & E is the most common method of abortion in the second trimester. Suction curettage is no longer viable because the fetus is too large in the second trimester to remove by suction alone. D & E involves the dilation of the cervix and the dismemberment of the fetus inside the uterus. Fetal parts are later removed from the uterus either with forceps or by suction. D & X is typically performed late in the second trimester between the twentieth and twenty-fourth weeks of pregnancy. Although the medical advantages of D & X have been asserted, the nature of the procedure has prompted pro-life advocates to characterize D & X as something akin to infanticide. In Women ' s Medical Professional Corporation v. Voinovich , the U.S. Court of Appeals for the Sixth Circuit discussed the differences between the D & E and D & X procedures in reference to an Ohio act that banned partial-birth abortions: The primary distinction between the two procedures is that the D & E procedure results in a dismembered fetus while the D & X procedure results in a relatively intact fetus. More specifically, the D & E procedure involves dismembering the fetus in utero before compressing the skull by means of suction, while the D & X procedure involves removing intact all but the head of the fetus from the uterus and then compressing the skull by means of suction. In both procedures, the fetal head must be compressed, because it is usually too large to pass through a woman's dilated cervix. In the D & E procedure, this is typically accomplished by either suctioning the intracranial matter or by crushing the skull, while in the D & X procedure it is always accomplished by suctioning the intracranial matter. The procedural similarities between the D & E and D & X procedures have contributed to the concern that the language of partial-birth abortion bans may prohibit both methods of abortion. Plaintiffs challenging partial-birth abortion statutes have generally sought the invalidation of such statutes on the basis of two arguments: first, that the statutes are unconstitutionally vague, and second, that the statutes are unconstitutional because they impose an undue burden on a woman's ability to obtain an abortion. The Supreme Court has held that an enactment is void for vagueness if its prohibitions are not clearly defined. Vague laws are found unconstitutional because they fail to give people of ordinary intelligence a reasonable opportunity to know what is prohibited and thus allow them to act lawfully. Moreover, the inability to provide explicit standards is feared to result in the arbitrary and discriminatory enforcement of a statute. The undue burden standard was adopted by the Court in Casey . In that case, the Court held that a state could enact abortion regulations at the pre-viability stage so long as an "undue burden" is not placed on a woman's ability to have an abortion. Any regulation which "has the purpose or effect of placing a substantial obstacle in the path of a woman seeking an abortion" creates an undue burden and is invalid. The Sixth Circuit was the first to consider whether a ban on partial-birth abortions imposes an undue burden on a woman's ability to have an abortion. In Voinovich , the court found that an Ohio statute that attempted to ban the D & X procedure was unconstitutional under Casey . The court determined that the language of the statute targeted the D & X procedure, but encompassed the D & E procedure. Because the D & E procedure is the most common method of second trimester abortions, the court contended that the statute created an undue burden on women seeking abortions at this point in their pregnancies. In Stenberg v. Carhart , a Nebraska physician who performed abortions at a specialized abortion facility sought a declaration that Nebraska's partial-birth abortion ban statute violated the U.S. Constitution. The Nebraska statute provided: No partial birth abortion shall be performed in this state, unless such procedure is necessary to save the life of the mother whose life is endangered by a physical disorder, physical illness, or physical injury, including a life-endangering physical condition caused by or arising from the pregnancy itself. The term "partial birth abortion" was defined by the statute as "an abortion procedure in which the person performing the abortion partially delivers vaginally a living unborn child before killing the unborn child and completing the delivery." The term "partially delivers vaginally a living unborn child before killing the unborn child" was further defined as "deliberately and intentionally delivering into the vagina a living unborn child, or a substantial portion thereof, for the purpose of performing a procedure that the person performing such procedure knows will kill the unborn child and does kill the unborn child." Violation of the statute carried a prison term of up to twenty years and a fine of up to $25,000. In addition, a doctor who violated the statute was subject to the automatic revocation of his license to practice medicine in Nebraska. Among his arguments, Dr. Carhart maintained that the meaning of the term "substantial portion" in the Nebraska statute was unclear and thus, could include the common D & E procedure in its ban of partial-birth abortions. Because the Nebraska legislature failed to provide a definition for "substantial portion," the U.S. Court of Appeals for the Eighth Circuit interpreted the Nebraska statute to proscribe both the D & X and D & E procedures: "if 'substantial portion' means an arm or a leg - and surely it must - then the ban ... encompasses both the D & E and the D & X procedures." The Eighth Circuit acknowledged that during the D & E procedure, the physician often inserts his forceps into the uterus, grasps a part of the living fetus, and pulls that part of the fetus into the vagina. Because the arm or leg is the most common part to be retrieved, the physician would violate the statute. The state argued that the statute's scienter or knowledge requirement limited its scope and made it applicable only to the D & X procedure. According to the state, the statute applied only to the deliberate and intentional performance of a partial birth abortion; that is, the partial delivery of a living fetus vaginally, the killing of the fetus, and the completion of the delivery. However, the Eighth Circuit found that the D & E procedure involves all of the same steps: "The physician intentionally brings a substantial part of the fetus into the vagina, dismembers the fetus, leading to fetal demise, and completes the delivery. A physician need not set out with the intent to perform a D & X procedure in order to violate the statute." The Supreme Court affirmed the Eighth Circuit's decision by a 5-4 margin. The Court based its decision on two determinations. First, the Court concluded that the Nebraska statute lacked any exception for the preservation of the health of the mother. Second, the Court found that the statute imposed an undue burden on the right to choose abortion because its language covered more than the D & X procedure. Despite the Court's previous instructions in Roe and Casey , that abortion regulation must include an exception where it is "necessary, in appropriate medical judgment, for the preservation of the life or health of the mother," the state argued that Nebraska's partial-birth abortion statute did not require a health exception because safe alternatives remained available to women, and a ban on partial-birth abortions would create no risk to the health of women. Although the Court conceded that the actual need for the D & X procedure was uncertain, it recognized that the procedure could be safer in certain circumstances. Thus, the Court stated, "a statute that altogether forbids D & X creates a significant health risk . . . [t]he statute consequently must contain a health exception." In its discussion of the undue burden that would be imposed if the Nebraska statute was upheld, the Court maintained that the plain language of the statute covered both the D & X and D & E procedures. Although the Nebraska State Attorney General offered an interpretation of the statute that differentiated between the two procedures, the Court was reluctant to recognize such a view. Because the Court traditionally follows lower federal court interpretations of state law and because the Attorney General's interpretative views would not bind state courts, the Court held that the statute's reference to the delivery of "a living unborn child, or a substantial portion thereof" implicated both the D & X and D & E procedures. Because the Stenberg Court was divided by only one member, Justice O'Connor's concurrence raised concern among those who support a woman's right to choose. Justice O'Connor's concurrence indicated that a state statute prohibiting partial-birth abortions would likely withstand a constitutional challenge if it included an exception for situations where the health of the mother is at issue, and if it was "narrowly tailored to proscribing the D & X procedure alone." Justice O'Connor identified Kansas, Utah, and Montana as having partial-birth abortion statutes that differentiate appropriately between D & X and the other procedures. The Partial-Birth Abortion Ban Act of 1999, S. 1692 , was introduced by then Senator Rick Santorum on October 5, 1999. The bill was approved by the Senate on October 21, 1999, by a vote of 63-34. H.R. 3660 , the Partial-Birth Abortion Ban Act of 2000, was introduced by then Representative Charles T. Canady on February 15, 2000. H.R. 3660 was passed by the House on April 5, 2000, by a vote of 287-141. On May 25, 2000, the House passed S. 1692 without objection after striking its language and inserting the provisions of H.R. 3660 . House conferrees were subsequently appointed, but no further action was taken. Both S. 1692 and H.R. 3660 would have imposed a fine and/or imprisonment not to exceed two years for any physician who knowingly performed a partial-birth abortion. Partial-birth abortion was defined as an abortion in which a person "deliberately and intentionally ... vaginally delivers some portion of an intact living fetus until the fetus is partially outside the body of the mother, for the purpose of performing an overt act that the person knows will kill the fetus" and actually performs the overt act that kills the fetus. In addition to criminal penalties, S. 1692 and H.R. 3660 provided a private right of action for "[t]he father, if married to the mother at the time she receives a partial-birth abortion procedure, and if the mother has not attained the age of 18 years at the time of the abortion, the maternal grandparents of the fetus . . . unless the pregnancy resulted from the plaintiff's criminal conduct or the plaintiff consented to the abortion." When President Clinton vetoed a similar partial-birth abortion bill, H.R. 1122 , during the 105 th Congress, he focused on the bill's failure to include an exception to the ban that would permit partial-birth abortions to protect "the lives and health of the small group of women in tragic circumstances who need an abortion performed at a late stage of pregnancy to avert death or serious injury." While S. 1692 and H.R. 3660 would have allowed a partial-birth abortion to be performed when it was necessary to save the life of the mother, such an abortion would not have been available when it was simply medically preferable to another procedure. H.R. 4965 , the Partial-Birth Abortion Ban Act of 2002, was introduced by Representative Steve Chabot on June 19, 2002. The bill was passed by the House on July 24, 2002, by a vote of 274-151. The measure was not considered by the Senate. H.R. 4965 would have prohibited physicians from performing a partial-birth abortion except when it was necessary to save the life of a mother whose life was endangered by a physical disorder, physical illness, or physical injury, including a life-endangering physical condition caused by or arising from the pregnancy itself. The bill defined the term "partial-birth abortion" to mean an abortion in which "the person performing the abortion deliberately and intentionally vaginally delivers a living fetus until, in the case of a head-first presentation, the entire fetal head is outside the body of the mother, or, in the case of breech presentation, any part of the fetal trunk past the navel is outside the body of the mother for the purpose of performing an overt act that the person knows will kill the partially delivered living fetus." Physicians who violated the act would have been subject to a fine, imprisonment for not more than two years, or both. Although H.R. 4965 did not provide an exception for the performance of a partial-birth abortion when the health of the mother was at issue, supporters of the measure maintained that the bill was constitutional. They contended that congressional hearings and fact finding revealed that a partial-birth abortion is never necessary to preserve the health of a woman, and that such an abortion poses serious risks to a woman's health. S. 3 , the Partial-Birth Abortion Ban Act of 2003, was signed by the President on November 5, 2003 ( P.L. 108-105 ). The House approved H.Rept. 108-288 , the conference report for the measure, on October 2, 2003, by a vote of 281-142. The Senate agreed to the conference report on October 21, 2003, by a vote of 64-34. In general, the act resembles the Partial-Birth Abortion Ban Act of 2002 in language and form. The act prohibits physicians from performing a partial-birth abortion except when it is necessary to save the life of a mother whose life is endangered by a physical disorder, physical illness, or physical injury, including a life-endangering physical condition caused by or arising from the pregnancy itself. Physicians who violate the act are subject to a fine, imprisonment for not more than two years, or both. Although the Supreme Court previously held that restrictions on abortion must allow for the performance of an abortion when it is necessary to protect the health of the mother, the act does not include such an exception. In his introductory statement for the act, then Senator Rick Santorum discussed the act's lack of a health exception. He maintained that an exception is not necessary because of the risks associated with partial-birth abortions. Senator Santorum insisted that congressional hearings and expert testimony demonstrate "that a partial birth abortion is never necessary to preserve the health of the mother, poses significant health risks to the woman, and is outside the standard of medical care." Within two days of the act's signing, federal courts in Nebraska, California, and New York blocked its enforcement. On April 18, 2007, the Court upheld the Partial-Birth Abortion Ban Act of 2003, finding that, as a facial matter, it is not unconstitutionally vague and does not impose an undue burden on a woman's right to terminate her pregnancy. In Gonzales v. Carhart , the Court distinguished the federal statute from the Nebraska law at issue in Stenberg . According to the Court, the federal statute is not unconstitutionally vague because it provides doctors with a reasonable opportunity to know what conduct is prohibited. Unlike the Nebraska law, which prohibited the delivery of a "substantial portion" of the fetus, the federal statute includes "anatomical landmarks" that identify when an abortion procedure will be subject to the act's prohibitions. The Court noted: "[I]f an abortion procedure does not involve the delivery of a living fetus to one of these 'anatomical landmarks'--where, depending on the presentation, either the fetal head or the fetal trunk past the navel is outside the body of the mother--the prohibitions of the act do not apply." The Court also maintained that the inclusion of a scienter or knowledge requirement in the federal statute alleviates any vagueness concerns. Because the act applies only when a doctor "deliberately and intentionally" delivers the fetus to an anatomical landmark, the Court concluded that a doctor performing the D & E procedure would not face criminal liability if a fetus is delivered beyond the prohibited points by mistake. The Court observed: "The scienter requirements narrow the scope of the act's prohibition and limit prosecutorial discretion." In reaching its conclusion that the Partial-Birth Abortion Ban Act of 2003 does not impose an undue burden on a woman's right to terminate her pregnancy, the Court considered whether the federal statute is overbroad, prohibiting both the D & X and D & E procedures. The Court also considered the statute's lack of a health exception. Relying on the plain language of the act, the Court determined that the federal statute could not be interpreted to encompass the D & E procedure. The Court maintained that the D & E procedure involves the removal of the fetus in pieces. In contrast, the federal statute uses the phrase "delivers a living fetus." The Court stated: "D&E does not involve the delivery of a fetus because it requires the removal of fetal parts that are ripped from the fetus as they are pulled through the cervix." The Court also identified the act's specific requirement of an "overt act" that kills the fetus as evidence of its inapplicability to the D & E procedure. The Court indicated: "This distinction matters because, unlike [D&X], standard D&E does not involve a delivery followed by a fatal act." Because the act was found not to prohibit the D & E procedure, the Court concluded that it is not overbroad and does not impose an undue burden a woman's ability to terminate her pregnancy. According to the Court, the absence of a health exception also did not result in an undue burden. Citing its decision in Ayotte v. Planned Parenthood of Northern New England , the Court noted that a health exception would be required if it subjected women to significant health risks. However, acknowledging medical disagreement about the act's requirements ever imposing significant health risks on women, the Court maintained that "the question becomes whether the act can stand when this medical uncertainty persists." Reviewing its past decisions, the Court indicated that it has given state and federal legislatures wide discretion to pass legislation in areas where there is medical and scientific uncertainty. The Court concluded that this medical uncertainty provides a sufficient basis to conclude in a facial challenge of the statute that it does not impose an undue burden. Although the Court upheld the Partial-Birth Abortion Ban Act of 2003 without a health exception, it acknowledged that there may be "discrete and well-defined instances" where the prohibited procedure "must be used." However, the Court indicated that exceptions to the act should be considered in as-applied challenges brought by individual plaintiffs: "In an as-applied challenge the nature of the medical risk can be better quantified and balanced than in a facial attack." Justice Ginsburg authored the dissent in Gonzales . She was joined by Justices Stevens, Souter, and Breyer. Describing the Court's decision as "alarming," Justice Ginsburg questioned upholding the federal statute when the relevant procedure has been found to be appropriate in certain cases. Citing expert testimony that had been introduced, Justice Ginsburg maintained that the prohibited procedure has safety advantages for women with certain medical conditions, including bleeding disorders and heart disease. Justice Ginsburg also criticized the Court's decision to uphold the statute without a health exception. Justice Ginsburg declared: "Not only does it defy the Court's longstanding precedent affirming the necessity of a health exception, with no carve-out for circumstances of medical uncertainty . . . it gives short shrift to the records before us, carefully canvassed by the District Courts." Moreover, according to Justice Ginsburg, the refusal to invalidate the Partial-Birth Abortion Ban Act of 2003 on facial grounds was "perplexing" in light of the Court's decision in Stenberg . Justice Ginsburg noted: "[I]n materially identical circumstances we held that a statute lacking a health exception was unconstitutional on its face." Finally, Justice Ginsburg contended that the Court's decision "cannot be understood as anything more than an effort to chip away at a right declared again and again by [the] Court--and with increasing comprehension of its centrality to women's lives." Citing the language used by the Court, including the phrase "abortion doctor" to describe obstetrician-gynecologists and surgeons who perform abortions, Justice Ginsburg maintained that "[t]he Court's hostility to the right Roe and Casey secured is not concealed." She argued that when a statute burdens constitutional rights and the measure is simply a vehicle for expressing hostility to those rights, the burden is undue.

The term "partial-birth abortion" refers generally to an abortion procedure where the fetus is removed intact from a woman's body. The procedure is described by the medical community as "intact dilation and evacuation" or "dilation and extraction" ("D & X") depending on the presentation of the fetus. Intact dilation and evacuation involves a vertex or "head first" presentation, the induced dilation of the cervix, the collapsing of the skull, and the extraction of the entire fetus through the cervix. D & X involves a breech or "feet first" presentation, the induced dilation of the cervix, the removal of the fetal body through the cervix, the collapsing of the skull, and the extraction of the fetus through the cervix. Since 1995, at least thirty-one states have enacted laws banning partial-birth abortions. Although many of these laws have not taken effect because of temporary or permanent injunctions, they remain contentious to both pro-life advocates and those who support a woman's right to choose. This report discusses the U.S. Supreme Court's decision in Stenberg v. Carhart, a case involving the constitutionality of Nebraska's partial-birth abortion ban statute. In Stenberg, the Court invalidated the Nebraska statute because it lacked an exception for the performance of the partial-birth abortion procedure when necessary to protect the health of the mother, and because it imposed an undue burden on a woman's ability to have an abortion. This report also reviews various legislative attempts to restrict partial-birth abortions during the 106th, 107th, and 108th Congresses. S. 3, the Partial-Birth Abortion Ban Act of 2003, was signed by the President on November 4, 2003. On April 18, 2007, the Court upheld the act, finding that, as a facial matter, it is not unconstitutionally vague and does not impose an undue burden on a woman's right to terminate her pregnancy. In reaching its conclusion in Gonzales v. Carhart, the Court distinguished the federal statute from the Nebraska law at issue in Stenberg.

The increased presence of foreign students in graduate science and engineering programs and in the scientific workforce has been and continues to be of concern to some in the scientific community. Enrollment of U.S. citizens in graduate science and engineering programs has not kept pace with that of foreign students in those programs. In addition to the number of foreign students in graduate science and engineering programs, a significant number of university faculty in the scientific disciplines are foreign, and foreign doctorates are employed in large numbers by industry. Those in the scientific community, arguing for ceilings on admissions for immigrants, maintain that foreign students use U.S. graduate education programs as stepping stones to immigration through sponsorships for legal permanent residence. Approximately 56% of foreign doctorate degree earners on temporary visas remain in the United States, with many eventually becoming citizens. Data on adjustments from temporary visas to permanent status reveal that approximately 6 in 10 new permanent residents occurred in both 2007 and 2008 from adjustments of status admissions. In 2008, approximately 15.0% of those individuals awarded legal permanent resident status resulted from employment-based preferences. Few will dispute that U.S. universities and industry have chosen foreign talent to fill many positions. Foreign scientists and engineers serve the needs of industry at the doctorate level and also have been found to serve in major roles at the masters level. Not surprisingly, there are charges that U.S. workers are adversely affected by the entry of foreign scientists and engineers, who reportedly accept lower wages than U.S. citizens would accept in order to enter or remain in the United States. These arguments occur in the context of a debate on projections and potential imbalances in certain scientific and technical disciplines. The U.S. Bureau of Labor Statistics reports that between the years 2006 and 2016, employment in science and engineering fields will increase at a faster rate than other professional groups. The growth rate will result, primarily, from growth in mathematics and computer-related occupations. Much attention in the scientific community has focused on the H-1B temporary admissions program. A report of the National Science Foundation (NSF) during the late 1980s claiming a nationwide shortage of scientists and engineers may have contributed to the decision by Congress to expand the skilled-labor preference system contained in the Immigration Act of 1990. The 1990 legislation more than doubled employment-based immigration, including scientists and engineers entering under the H-1B visa category. The act raised the numerical limits or ceilings on permanent, employment-based admissions, from 54,000 to 140,000 annually. In addition, the legislation ascribed high priority to the entry of selected skilled and professional workers, and simplified admissions procedures for foreign nationals seeking to temporarily work, study, or conduct business in the United States. On October 17, 2000, the American Competitiveness in the Twenty-First Century Act of 2000 was signed into law ( P.L. 106 - 313 ), significantly changing the H-1B program and the employment-based immigration program. The legislation raised the annual number of H-1B visas to 195,000 for FY2001, FY2002, and FY2003, and returned to 65,000 in FY2004. It excluded from the new ceiling all H-1B nonimmigrants who are employed by institutions of higher education and nonprofit or governmental research organizations. The law authorized additional H-1B visas for FY1999 to offset the visas inadvertently approved for the year that exceeded the cap. In addition, the law increased the fees employers paid for each petition for nonimmigrant status--from $500 to $1,000 per petition. A portion of the fees were made available to the NSF for the development of private-public partnerships in K-12 education, the expansion of computer science, engineering, and mathematics scholarships, and the establishment of demonstration programs or projects that provide technical skills training for U.S. workers, both employed and unemployed. Signed into law on December 8, 2004, P.L. 108 - 447 , The Consolidated Appropriations Act, 2005, reauthorized H-1B funding. The fee employers pay for each petition was raised from $1,000 to $1,500 per petition. For employers with less than 25 full-time equivalent employees, the fee was set at $750 per petition. Also, the legislation created an additional 20,000 H-1B visas for FY2005, for those who had earned a masters degree or higher from a U.S. institution of higher education. The scientific community has been divided over proposals to impose stricter immigration limits on people with scientific and technical skills. Attempts to settle upon the balance between the needs for a highly skilled scientific and technical workforce, and the need to protect and ensure job opportunities, salaries, and working conditions of U.S. scientific personnel, will continue to be debated. This paper addresses these issues. The number of non-U.S. citizens enrolling in U.S. colleges and universities slowed following the September 11 th terrorist attacks. The slowing of enrollments has been attributed to, among other things, the tightening of U.S. visa policies and increased global competition for graduates in the scientific and technical disciplines from countries such as China, India, and Canada. However, a 2009 report of the Institute of International Education reveals that for the academic year 2008-2009, the number of foreign-born students (in all disciplines) increased by 8.0%, the largest recorded increase since 1980. The growth of students from China contributed significantly to the increase. In addition, new foreign student enrollment for 2008-2009 increased by approximately 16.0% from the previous academic year. The new enrollments are said to result from both recruitment efforts by U.S. institutions and recently improved visa processing for students. The international student enrollment changes are reflected differently by types of institutions, levels of study, and disciplines. There are noticeable differences by world region of origin in the flow of foreign students to the United States. India's students were 15.4% of the population for academic year 2008-2009. The other countries of origin of foreign students falling within the top ten were China (14.6%), South Korea (11.2%), Canada (4.4%), Japan (4.4%), Taiwan (4.2%), Mexico (2.2%), Turkey (2.0%), Vietnam, (1.9%), and Saudi Arabia (1.9%). The top ten fields of study for all foreign students were: business and management (20.6%), engineering (17.7%), physical and life sciences (9.2%), social sciences (8.5%), mathematics and computer sciences (8.4%), health professions (5.2%), fine and applied arts (5.2%), intensive English language (4.2%), humanities (2.9%), education (2.7%), and agriculture (1.3%). NSF data reveal that in 2006, the foreign student population earned approximately 36.2% of the doctorate degrees in the sciences and approximately 63.6% of the doctorate degrees in engineering. In 2006, foreign students on temporary resident visas earned 32.0% of the doctorates in the sciences, and 58.6% of the doctorates in engineering. (See Figure 1 .) The participation rates in 2005 were 30.8% and 58.4%, respectively. In 2006, permanent resident status students earned 4.2% of the doctorates in both the sciences and engineering, a slight change from the 2005 levels of 3.8% in the sciences and 4.4% in engineering. Trend data for science and engineering degrees for the years 1996-2005 reveal that of the non-U.S. citizen population, temporary resident status students consistently have earned the majority of the doctorate degrees. (See Table 1 and Table 2 .) Disaggregated data for the subfields of science provide a detailed picture of degree recipients by U.S. citizenship and non-U.S. citizenship status. In 2006, foreign students (temporary and permanent resident status) were awarded 47.9% of the doctorates in the physical sciences, an increase from the 46.2% awarded in 2005. In mathematics, 55.3% of the doctorates were awarded to foreign students in 2006, a slight increase from the 55.1% awarded in 2005. For the computer sciences, 61.3% were awarded to foreign students, an increase above the 2005 level of 58.8%. The earth, atmospheric, and ocean sciences and the agricultural and biological sciences awarded 35.4% and 33.6% of the degrees respectively to foreign-born students in 2006, compared to the 2005 levels of 35.7% and 32.1%. In the social sciences and psychology, 24.6% of the doctorates were awarded to foreign students in 2006, almost level with the 24.5% awarded in 2005. The NSF provides specific data on the country of origin of foreign-born science and engineering doctorate awards. Data for 2006 reveal that of the earned doctorate degree holders (non-U.S. citizens), 33.5% were from China, 11.9% were from India, 3.4% were from Taiwan, 2.8% from Canada, 3.4% from Africa, 2.8% from Turkey, 1.7% from Japan, and 1.4% from Germany. See Figure 2 for additional disaggregated data on doctorate degrees awarded to non-U.S. citizens by country of origin. Certain restrictions have been placed on foreign students with temporary resident student status who are enrolled in graduate programs in U.S. institutions. Foreign graduate students are required to be full-time students, and are prohibited, due to visa restrictions, from seeking employment. While they are prohibited also from obtaining most fellowships, traineeships or federally guaranteed loans, they are able to be employed as research assistants or teaching assistants on federally funded research projects. Foreign and U.S. science and engineering graduate students receive financial support from many resources--personal, university (primarily through teaching assistantships, research assistantships/traineeships, fellowships/dissertation grants) , foreign government, employer, and other. Many foreign students receive support from their home country, though it is generally limited to the first year of study. For the continuing years, the university usually provides support mostly in the form of research assistantships or teaching assistantships. While temporary resident foreign students are ineligible for direct federal aid, the university support provided to them through research assistantships and teaching assistantships often results from federally funded research grants awarded to their home institution. The 2007 report, Doctorate Recipients from United States Universities: Summary Report 2006 , reveals that institutions of higher education provide a significant amount of support, primarily through teaching assistantships, research assistantships/traineeships, and fellowships/dissertation grants, to foreign students on temporary and permanent resident visas. In all fields, a greater percentage of non-U.S. citizen doctoral recipients receive financial assistance from universities than do U.S. doctoral recipients. (See Table 3 for primary sources of financial support.) A disaggregation of the data by race/ethnicity reveal that 40.6% of Native Americans/Alaska Natives doctoral students relieved on their own resources to finance their graduate studies, followed by blacks at 38.8%, whites, at 30.1%, Hispanics, at 30.7%, and Asians, at 16.9%. In the physical sciences, which include mathematics, computer and information sciences, universities provided the primary support for 84.6% of temporary resident students, 73.1% for permanent residents, and 58.8% for U.S. citizens. In engineering, 84.8% of temporary resident students received primary financial support from universities, as did 63.9% of permanent resident students, and 42.8% of U.S. citizen doctoral students. Even in those disciplines where foreign students do not participate with any degree of frequency (i.e., education and the social sciences), larger percentages of foreign doctoral students on temporary and permanent resident visas obtained their primary financial assistance from universities than did comparable U.S. students. In the field of education, 43.6% of temporary resident doctoral students received their primary financial support from universities; for permanent resident students, 41.5%, and for U.S. citizens, 13.4%. In the social sciences, universities provided financial support to 54.0% of temporary resident doctoral students, 43.9% for permanent residents, and 35.7% for U.S. citizens. There are divergent views in the scientific and academic community about the effects of a measurable foreign student presence in graduate science and engineering programs. Some argue that U.S. universities benefit from a large foreign citizen enrollment by helping to meet the needs of the university and, for those students who remain in the United States, the nation's economy. Foreign students generate three distinct types of measurable costs and benefits. First, 13 percent of foreign students remain in the United States, permanently increasing the number of skilled workers in the labor force. Second, foreign students, while enrolled in schools, are an important part of the workforce at those institutions, particularly at large research universities. They help teach large undergraduate classes, provide research assistance to the faculty, and make up an important fraction of the bench workers in scientific labs. Finally, many foreign students pay tuition, and those revenues may be an important source of income for educational institutions. The noticeable participation of foreign students in graduate programs has generated critical responses by many in the minority community. Blacks, Hispanics, and Native Americans, historically underrepresented in the science and engineering fields, contend that disparity exists in the university science community with respect to foreign students. It is charged that there is not equal access for U.S. minorities to graduate education, receipt of scholarships, promotion to higher ranks, receipt of research funds, access to outstanding research collaborators, and coauthorship of papers and other outlets for scientific publications. Frank L. Morris, former professor, University of Texas, charged that colleges and universities employ exclusionary mechanisms. Rather than supporting minority graduate students, institutions provided the majority of their resources to departments that have admitted foreign students. In testimony before the Subcommittee on Immigration and Claims, Morris stated that: The generous immigration policy coupled with the much better and disproportionate and much better subsidy out of U.S. taxpayer funds of foreign doctoral student over all American minority students and especially much better than the support given to African American doctoral students.... This has created a situation that place the economic well being of the African American community in jeopardy because we have received inadequate doctoral training to prepare for or compete in an increasing information and higher order scientifically technologically driven current and future U.S. economy. Another criticism noted by some is that foreign student teaching assistants do not communicate well with American students. Language as a barrier has been a perennial problem for some foreign students. There are charges that the "accented English" of the foreign teaching assistants affects the learning process. A large number of graduate schools require foreign teaching assistants to demonstrate their proficiency in English, but problems remain. Several states have passed legislation setting English-language standards for foreign students serving as teaching assistants. Some academics and scientists do not view scientific migration as a problem, but as a net gain. These proponents believe that the international flow of knowledge and personnel has enabled the U.S. economy to remain at the cutting-edge of science and technology. A 2005 report of the National Academies states that: The participation of international graduate students and postdoctoral scholars is an important part of the research enterprise of the United States. In some fields they make up more than half the populations of graduate students and postdoctoral scholars. If their presence were substantially diminished, important research and teaching activities in academe, industry, and federal laboratories would be curtailed, particularly if universities did not give more attention to recruiting and retaining domestic students. During the 1980s, the number of immigrant scientists and engineering entering the United States remained somewhat stable (12,000), registering only slight annual increases. In 1992, there was a marked increase in the admissions of scientists and engineering, fueled primarily by the changes in the Immigration Act of 1990 that allowed significant increases in employment-based quotas of H-1B visas. By 1993, the number of scientists and engineers on permanent visas increased to 23,534. The numbers were increased further as a result of the Chinese Students Protection Act of 1992. The proportion of foreign born scientists and engineers in the U.S. labor force reached a record in 2000, revealing high levels of entry by holders of permanent and temporary visas during the 1990s. The issuance of permanent visas in the past few years has been impacted by administrative changes at the U.S. Citizenship and Immigration Services (USCIS), changes in immigration legislation, and any impact of September 11 th . Foreign scientists and engineers on temporary work visas have generated considerable discussion. As previously stated, recent legislation has increased the annual quota for the H-1B program in which foreign-born workers can obtain visas to work in an occupation for up to six years. The H-1B program, generally, is thought of as an entry for technology workers, but it is used also to hire other skilled workers. A report of the NSF notes that "An H-1B visa is sometimes used to fill a position not considered temporary, for a company may view an H-1B visa as the only way to employ workers waiting long periods for a permanent visa." Data on selected occupations for which companies have been given permission to hire H-1B visa workers are contained in Table 4 . Some argue that the influx of immigrant scientists and engineers has resulted in depressed job opportunities, lowered wages, and declining working conditions for U.S. scientific personnel. While many businesses, especially high-tech companies, have recently downsized, the federal government issued thousands of H-1B visas to foreign workers. There are those in the scientific and technical community who contend that an over-reliance on H-1B visa workers to fill high-tech positions has weakened opportunities for the U.S. workforce. Many U.S. workers argue that a number of the available positions are being filled by foreign labor hired at lower salaries. Those critical of the influx of immigrant scientists have advocated placing restrictions on the hiring of foreign skilled employees in addition to enforcing the existing laws designed to protect workers. Those in support of the H-1B program maintain that there is no "clear evidence" that foreign workers displace U.S. workers in comparable positions and that it is necessary to hire foreign workers to fill needed positions, even during periods of slow economic growth. A September 2006 report of the Government Accountability Office (GAO), H-1B Visa Program: More Oversight by Labor Can Improve Compliance with Program Requirements, states that: Labor's review of employers' H-1B applications is limited by law to identifying omissions and obvious inaccuracies, but we found it does not consistently identify all obvious inaccuracies. ...Labor's Wage and Hour Division (WHD) enforces H-1B program requirements by investigating complaints made against H-1B employers and recently began random investigations of previous program violators. From fiscal year 2000 through fiscal year 2005, complaints and violations increased but changes in the program, such as temporary increases in visa caps, may have been a factor.... However, USCIS does not have a formal mechanism to report such information to Labor, and current law precludes WHD from using this information to initiate an investigation of an employer. Justice pursues charges filed by U.S. workers alleging they were not hired or were displaced so that an H-1B worker could be hired instead, but it has not found discriminatory conduct in most cases. The maturing of the computer industry has wrought its own set of problems relative to employment of foreign scientists and engineers. There are some who contend that the salary of the foreign-born computer professionals working in the United States is lower than that of their U.S. counterparts who are the same age and educational level. Others charge that the hiring of H-1B workers "undermines the status and bargaining position of U.S. workers." The Department of Labor (DOL) has sought to enforce the existing policies on temporary employment of nonimmigrant foreign workers under H-1B visas, and to penalize those employers who are found to be in violation. Many in the scientific community maintain that in order to compete with countries that are rapidly expanding their scientific and technological capabilities, the United States needs to bring in those whose skills will benefit society and will enable us to compete in the new-technology-based global economy. Individuals supporting this position do believe that the conditions under which foreign talent enters U.S. colleges and universities and the labor force should be monitored more carefully. And there are those who contend that the underlying concern of foreign students in graduate science and engineering programs is not necessarily that there are too many foreign-born students, but that there are not enough native-born students entering the scientific and technical disciplines. A May 2010 report of the National Science Board states that: Attracting and retaining foreign-born talent remains an essential pillar of our Nation's STEM [science, technology, engineering, and mathematics] enterprise. As global demand for STEM talent surges, we cannot reliably expect that the best and brightest from abroad will remain in the United States and continue to be a sufficient source of talent. It is essential that we develop our own domestic human capital as well. Ideally, foreign talent should augment a robust domestic STEM talent pipeline, not compensate for its deficiencies. The debate on the presence of foreign students in graduate science and engineering programs and the workforce intensified following the terrorist attacks of September 11, 2001. It has been reported that foreign students in the United States are encountering "a progressively more inhospitable environment." A June 2006 report of the Association of International Educators, Restoring U.S. Competitiveness for International Students and Scholars , states that " ... [F]or the first time, the United States seems to be losing its status as the destination of choice for international students." Concerns have been expressed about certain foreign students receiving education and training in sensitive areas. There has been increased discussion about the access of foreign scientists and engineers to research and development (R&D) related to chemical and biological weapons. Also, there is discussion of the added scrutiny of foreign students from countries that sponsor terrorism. The academic community is concerned that the more stringent requirements of foreign students may have a continued impact on enrollments in colleges and universities. Others contend that a possible reduction in the immigration of foreign scientists may affect negatively on the competitiveness of U.S. industry and compromise commitments made in long-standing international cooperative agreements. The issue of tracking foreign students attending U.S. institutions has generated particular debate in the academic and scientific community following the September 11 th terrorist attacks. Prior to September 11 th , the Illegal Immigration Reform and Immigrant Responsibility Act ( P.L. 104 - 208 ) authorized the Student and Exchange Visa Program/Coordinated Interagency Partnership Regulating International Students (SEVP/CIPRIS). This electronic information reporting system for tracking foreign students and researchers was to replace the existing paper-based format. The legislation required colleges and universities to monitor and compile data on foreign students attending their respective institutions in such areas as date of enrollment/reporting, field of study, credits earned, and source of financial support for the student. The information was to be provided to the INS by the colleges and universities. However, the system was never fully implemented, primarily because institutions described it as being too costly, an "unnecessary burden on colleges and universities," and "an unreasonable barrier to foreign students." The USA Patriot Act ( P.L. 107 - 56 ) and the Enhanced Border Security and Visa Entry Reform Act ( P.L. 107 - 173 ) revised and enhanced the process for collecting and monitoring data on foreign students and researchers in U.S. institutions. In response to the legislation, the INS developed the Student and Exchange Visitor Information System (SEVIS). SEVIS, a web-based system, was designed to maintain current information on foreign students and exchange visitors in order to ensure that they arrive in the United States, register at the institution or predetermined exchange program, and properly maintain their visa status during their stay. Congress directed the then INS to have the tracking system in operation by January 30, 2003. The deadline for implementation of SEVIS was extended to February 15, 2003. However, SEVIS experienced considerable problems and created excessive delays in processing visa applications. The more rigorous screening of visa applicants was one factor contributing to the delays. The existing problems with SEVIS are described as being primarily those relating to technical matters and personnel costs. Currently, there is a proposal to implement a second-generation system, SEVIS II, that would expand the capabilities of the current tracking system and address any reported technical difficulties or security issues. On September 13, 2005, the House Subcommittee on National Security, Emerging Threats, and International Relations held a hearing to examine the procedures put in place to correct the gaps and vulnerabilities in the visa process. Attention was directed at the mechanisms that are necessary to strengthen the visa process as an antiterrorism tool while simultaneously facilitating legitimate travel by foreign students, scientists, researchers, and others in the United States. Witnesses testified that consular workloads had increased significantly, yet the visa-processing offices continued to lack strategic direction, adequate resources, and training. In addition, reliable data were not readily available, across and among departments and agencies, to determine security and visa fraud related issues and overall increased visa wait times. Witnesses stated that because visa policies and requirements are ongoing and can change quickly, clear procedures on visa issuance and monitoring operations worldwide are necessary to guarantee that visas are adjudicated in a consistent manner at each visa-issuing post. The Government Accountability Office (GAO) has released several reports detailing the efforts and the improvements that have been made in the visa processing. Other reports of the GAO assessed agencies' progress in implementing recommended changes in visa operations. An April 4, 2006 report-- Border Security, Reassessment of Consular Requirements Could Help Address Visa Delays, stated that while steps have been taken to improve the visa application system, additional issues required immediate attention. The recommendations included clarifying visa policies and procedures in order to facilitate their implementation, and ensuring that consular officers have access to the needed tools to improve national security and promote legitimate travel. Comprehensive immigration reform legislation was debated and under consideration during the beginning of the 110 th Congress. Those attempts at reform failed and comprehensive reform legislation was not revisited. Comprehensive federal immigration reform has been reintroduced in the 111 th Congress. H.R. 4321 , Comprehensive Immigration Reform for America's Security and Prosperity Act, would, among other things, exempt specified categories of U.S.-educated immigrants from employment-based immigration limits. The bill would also amend H-1B visa employer application requirements by lengthening U.S. worker displacement protection and prohibiting employer position announcements that specify positions solely to, or that gives priority to, H-1B immigrants. In addition, bills have been introduced in the 111 th Congress that are directed at attracting foreign students in the scientific and technical disciplines while maintaining the interests of American scientists. H.R. 1736 , International Science and Technology Cooperation Act, would, among other things, address the various issues that impact the ability of U.S. scientists and engineers to collaborate with foreign counterparts. S. 887 , H-1B and L-1 Visa Reform Act, would amend H-1B employer requirements by limiting the number of H-1B and L-1 employees that an employer of 50 or more workers in the United States may hire. The bill would also direct the DOL to conduct annual audits of businesses with large numbers of H-1B workers. H.R. 1791 , Stopping Trained in America Ph.D.s from Leaving the Economy Act (STAPLE), would direct numerical limitations on immigrants who have been awarded a doctorate degree in the scientific disciplines from a U.S. institution and who have an offer of employment from a U.S. employer in a degree-related field. In addition, the bill would provide H-1B visa numerical limitations on immigrants who have earned a doctorate in a scientific discipline and with respect to a petitioning employer, requires that education as a condition of employment.

The increased presence of foreign students in graduate science and engineering programs and in the scientific workforce has been and continues to be of concern to some in the scientific community. Enrollment of U.S. citizens in graduate science and engineering programs has not kept pace with that of foreign students in those programs. In addition to the number of foreign students in graduate science and engineering programs, a significant number of university faculty in the scientific disciplines are foreign, and foreign doctorates are employed in large numbers by industry. Few will dispute that U.S. universities and industry have chosen foreign talent to fill many positions. Foreign scientists and engineers serve the needs of industry at the doctorate level and also have been found to serve in major roles at the masters level. However, there are charges that U.S. workers are adversely affected by the entry of foreign scientists and engineers, who reportedly accept lower wages than U.S. citizens would accept in order to enter or remain in the United States. NSF data reveal that in 2006, the foreign student population earned approximately 36.2% of the doctorate degrees in the sciences and approximately 63.6% of the doctorate degrees in engineering. In 2006, foreign students on temporary resident visas earned 32.0% of the doctorates in the sciences, and 58.6% of the doctorates in engineering. The participation rates in 2005 were 30.8% and 58.4%, respectively. In 2006, permanent resident status students earned 4.2% of the doctorates in both the sciences and in engineering, a slight change from the 2005 levels of 3.8% in the sciences and 4.4% in engineering. Many in the scientific community maintain that in order to compete with countries that are rapidly expanding their scientific and technological capabilities, the country needs to bring to the United States those whose skills will benefit society and will enable us to compete in the new-technology based global economy. The academic community is concerned that the more stringent visa requirements for foreign students may have a continued impact on enrollments in colleges and universities. There are those who believe that the underlying problem of foreign students in graduate science and engineering programs is not necessarily that there are too many foreign-born students, but that there are not enough native-born students pursuing scientific and technical disciplines. Legislation has been introduced in the 111th Congress to attract foreign students in the scientific and technical disciplines and to maintain the interests of American scientists. H.R. 4321, Comprehensive Immigration Reform for America's Security and Prosperity Act, would, among other things, amend H-1B visa employer application requirements by lengthening U.S. worker protection and prohibiting employer position announcements that specify positions solely to, or give priority to, H-1B visa holders. H.R. 1791, Stopping Trained in America Ph.D.s from Leaving the Economy Act (STAPLE), would place numerical limitations on immigrants who have been awarded a doctorate degree in the scientific disciplines from a U.S. institution and who have an offer of employment from a U.S. employer in a degree-related field.

"Sequestration" is a process of automatic, largely across-the-board spending reductions under which budgetary resources are permanently canceled to enforce certain budget policy goals. It was first authorized by the Balanced Budget and Emergency Deficit Control Act of 1985 (BBEDCA; Title II of P.L. 99-177 , commonly known as the Gramm-Rudman-Hollings Act). Currently, sequestration is being used as an enforcement tool under the Budget Control Act of 2011 (BCA; P.L. 112-25 ). Because Congress failed to act by January 15, 2012, to reduce the deficit by at least $1.2 trillion, a series of automatic spending reductions has been triggered. The reductions take the form of the sequestration of mandatory spending in each of FY2013-FY2021, a one-year sequestration of discretionary spending for FY2013, and lower discretionary spending limits for each of FY2014-FY2021. Certain federal programs are exempt from sequestration, and special rules govern the effects of sequestration on other programs. Most of these provisions are found in Sections 255 and 256 of BBEDCA, as amended. Sequestration, required by the BCA ( P.L. 112-25 ) and first implemented on March 1, 2013 (delayed by P.L. 112-240 ), affects some but not all types of unemployment insurance (UI) benefits. Benefits from the regular Unemployment Compensation (UC), Unemployment Compensation for Ex-Servicemembers (UCX), and Unemployment Compensation for Federal Employees (UCFE) programs are exempt and not subject to the sequester reductions. Extended Benefits (EB) and the temporary, now-expired Emergency Unemployment Compensation (EUC08)--as well as most forms of UI administrative funding--are not exempt from the sequester, however, and, therefore, are subject to the sequester reductions. The U.S. Department of Labor (DOL) has released details on how the UI BCA sequester reductions should be implemented. This DOL guidance outlines how states, which administer UI benefits, must reduce all EB and EUC08 benefits, when that program was authorized. For FY2015, the sequester order requires a 7.3% reduction in all nonexempt nondefense mandatory expenditures, including EB benefits. Since authorization for EUC08 benefits expired at the end of 2013, EB benefits are the only type of UI benefit subject to the FY2015 sequester. As of the week of January 18, 2015, however, no EB benefits have been available in any state in FY2015 thus far. The U.S. DOL has announced that any EB benefit payments in FY2015 must be reduced by 7.3% for weeks of unemployment beginning on October 4, 2014, through September 26, 2015. This reduction only applies to the federal share of EB benefits, which is 50% (states finance the other 50% of EB benefits). States generally would be responsible for paying the amount of the EB benefit subject to sequester (i.e., making up the 7.3% reduction in FY2015). However, under federal law, a state may choose to reduce EB benefits by the amount sequestered if the state changes its state unemployment law and the reduction is equivalent to the sequester reduction. The Office of Management and Budget's (OMB's) sequester order for FY2014 required a 7.2% reduction in all nonexempt nondefense mandatory expenditures, including EB and EUC08 benefits. Authorization for the EUC08 program ended the week ending on or before January 1, 2014 (i.e., December 28, 2013; or December 29, 2013, in New York State). EB benefits were not available in any state in FY2014. The U.S. DOL announced that EUC08 benefit payments were to be reduced by 7.2% for benefits paid for weeks of unemployment beginning on October 6, 2013, and ending December 28, 2013. According to its guidance, the U.S. DOL worked with states individually to assist them in administering the FY2014 sequester of EUC08: Due to the extraordinary programming challenges states experienced during sequestration implementation for FY 2013, and the additional challenges presented by the further changes necessary for sequestration implementation for FY 2014, the Department has reached out to states with various options that may be used in order to achieve the required FY 2014 sequestration savings. Letters have been sent to each state approving the implementation strategy agreed upon by the Department and the states in advance of further specific guidance in this UIPL [Unemployment Insurance Program Letter.] Although no EB benefits were paid in FY2014, any EB benefits would have been reduced by 7.2% for any benefits paid for weeks of unemployment beginning on October 6, 2013, and ending September 27, 2014. Only the federal share of EB benefit costs were subject to the sequester. The temporary 100% federal financing of EB benefits ended on December 31, 2013. After December 31, 2013, the federal share of EB benefit costs returned to 50% (and states finance 50% of EB benefits). States generally would have been responsible for paying the amount of the EB benefit subject to sequester (i.e., making up the 7.2% reduction). However, under federal law, a state may reduce EB benefits by the amount sequestered if the state changes its state unemployment law and the reduction is equivalent to the sequester reduction. Table 1 provides the sequestration percentages that were applied to nonexempt UI benefits in FY2013 (October 1, 2012, through September 30, 2013). Actual UI payment reductions began to be implemented by states the week beginning March 31, 2013. No EB or EUC08 benefits already paid to individuals were recovered to satisfy the sequestration reductions. OMB's BCA sequester order required a 5.1% reduction for all nonexempt nondefense mandatory expenditures for FY2013. Thus, according to DOL guidance, EUC08 and EB payments were required to be reduced by 10.7% for benefits paid for weeks of unemployment beginning on March 31, 2013, in order to meet the 5.1% reduction target for FY2013. Higher percentage reductions in EB and EUC08 benefits were associated with later dates of state implementation of the UI sequester. Table 1 provides the schedule of benefit reductions for FY2013 for states that implemented the reductions later than March 31, 2013. As of the effective date of the implementation of the FY2013 sequester, only Alaska was in a payable EB period in FY2013; and that EB period ended on May 4, 2013. Alaska began implementing its FY2013 sequester cuts on May 19, 2013, which was after the last payable EB period in Alaska ended. Therefore, in FY2013, states were responsible for implementing the sequester of EUC08 benefits only. According to the National Association of State Workforce Agencies (NASWA), of the 52 states and territories that responded to a survey in June 2013, 19 states implemented FY2013 sequester cuts of 10.7% on March 31, 2013; 9 states implemented cuts by April 30, 2013; 14 states implemented cuts by May 31, 2013; 8 states planned to implement cuts by June 30, 2013; and 1 state planned to implement cuts by August 31, 2013. In addition, NASWA reported that North Carolina did not plan to implement the sequester reduction for FY2013 since the EUC08 program in that state no longer met the federal requirements to offer EUC08 to its workers as of July 2013. Not all states implemented the sequestration reductions uniformly across all EUC08 beneficiaries in FY2013. Several states were unable to implement the preferred method of reduction as outlined by the U.S. DOL. Among these states, there were three alternative methods used in FY2013: (1) paused-week, (2) grandfathering, and (3) reduction of weeks within a tier. 1. Paused-Week : States scheduled two-three weeks during which no EUC08 benefits were paid. The remaining weeks of EUC08 were still paid. For example, South Carolina did not pay EUC08 benefits for the weeks ending on May 18, July 13, and August 31, 2013. 2. Grandfathering : The sequester cuts applied only to claimants entering a new EUC08 tier. For example, in California the 17.69% cut did not impact anyone collecting EUC08 on an existing tier filed with an effective date before April 28, 2013. Instead, the sequester reduction was implemented when an individual finished a current tier and became eligible to receive benefits on the next EUC08 tier filed with an effective date of April 28, 2013, or after. 3. Reduction of Weeks in EUC08 Tiers : The state reduced the number of weeks available in each tier of EUC08, but did not reduce the weekly benefit paid. For example, Maine opted to stop paying the last eight weeks of tier III EUC08 benefits, leaving one remaining week available. For more specific information on state implementation of the UI sequester, links to state workforce agency websites are available through the U.S. Department of Labor's America's Service Locator at http://www.servicelocator.org/OWSLinks.asp . There has been no relevant legislation introduced in the 114 th Congress as of the date of this publication. In the 113 th Congress, H.R. 2177 , the Unemployment Restoration Act, would have made both EB and EUC08 exempt from sequestration. This exemption would have been retroactive and would have continued through FY2021. Any reduction of UI payments made because of the sequester would have been paid back retroactively. Due to the required reductions in agency spending under the sequester, federal agencies may furlough some or all of their employees for a period of time. The Office of Personnel Management (OPM) states: An administrative furlough is a planned event by an agency which is designed to absorb reductions necessitated by downsizing, reduced funding, lack of work, or any budget situation other than a lapse in appropriations. Furloughs that would potentially result from sequestration would generally be considered administrative furloughs. In the event of a furlough, federal employees may become eligible for UI benefits through the Unemployment Compensation for Federal Employees (UCFE) program. Under federal law, UCFE provides income support for laid-off or furloughed federal employees in the same way as under the UC program for other types of workers. Eligibility--as well as benefit levels and the waiting period for benefits--under UCFE are determined according to the state laws of the UC program in the state where the federal employee's official duty station was located. As with UC, separated federal employees, including furloughed employees, must have earned a certain amount of wages or have worked for a certain period of time (or both) within the previous 12-18 months to be monetarily eligible to receive any UI benefits (although methods that states use to determine this eligibility vary greatly). Thus, whether or not a furloughed federal employee may be eligible for UCFE will depend on relevant state UC laws. In particular, two key state law issues factor into this type of UCFE eligibility decision: (1) the state definition of "partial unemployment" and (2) whether or not there is a "waiting week" required under state law. First, because UI benefits are designed to provide temporary income support to the involuntarily unemployed , a furloughed federal employee must meet the relevant state definition of unemployment. The UI system permits benefit receipt in certain circumstance of reduced work hours or short-term reemployment--primarily in order not to discourage work or reemployment. Therefore, each state has its own laws regarding how much work may be performed without making an individual ineligible for UI benefits, that is, partial unemployment. Under state laws, an individual is generally considered to be partially unemployed in any week with less than full-time work and with earnings of less than the weekly benefit amount, or the weekly benefit amount plus an allowance. For instance, in the District of Columbia, an individual is considered partially unemployed if he or she has earnings that are less than the individual's weekly benefit amount plus $20. Furloughed individuals must meet the state definition of partial unemployment in order to be potentially eligible for UC or UCFE benefits. Second, most states require that eligible individuals first serve a waiting week before receiving any UI benefits. For instance, the District of Columbia and Virginia have a waiting week requirement of one week. Maryland has no waiting week requirement. In states with a waiting week requirement, an individual's furlough days would need to be spread out across more than one week of unemployment. That is, an individual would need to meet the state's definition of unemployment--including partial unemployment--in more than one week (i.e., the waiting week plus an additional week) in order to be eligible for UI benefits. For additional guidance on furloughed federal employees and UCFE, see U.S. DOL, "Information for Furloughed Federal Workers," available at http://www.dol.gov/sequestration/ui-federalemployees.htm ; and OPM, "Guidance for Administrative Furloughs," June 10, 2013, p. 18 (H.1.), available at http://www.opm.gov/policy-data-oversight/pay-leave/furlough-guidance/guidance-for-administrative-furloughs.pdf .

"Sequestration" refers to a process of automatic, largely across-the-board spending reductions under which budgetary resources are permanently canceled to enforce certain budget policy goals. Most recently, sequestration was triggered by the Budget Control Act of 2011 (BCA; P.L. 112-25) and first implemented on March 1, 2013 (delayed by P.L. 112-240). Some, but not all, types of unemployment insurance (UI) benefits are subject to reductions under the BCA sequester. Regular Unemployment Compensation (UC), Unemployment Compensation for Ex-Servicemembers (UCX), and Unemployment Compensation for Federal Employees (UCFE) benefits are specifically exempt from the sequester reductions. UI payments from the Extended Benefit (EB) and now-expired Emergency Unemployment Compensation (EUC08) programs, however, are subject to the sequester reductions. States administer all types of UI benefits. Therefore, states are responsible for carrying out the sequester reduction in UI benefit payments. The amount and method by which a UI recipient's benefit is reduced varies by state and the date the reduction begins. This report provides brief answers to some frequently asked questions regarding sequestration and unemployment insurance benefits. Additional information on UI programs and benefits is available in CRS Report RL33362, Unemployment Insurance: Programs and Benefits, by [author name scrubbed] and [author name scrubbed]; and CRS Report R42444, Emergency Unemployment Compensation (EUC08): Status of Benefits Prior to Expiration, by [author name scrubbed] and [author name scrubbed]. Additional information on modifications to UI programs and benefits as a result of recent changes to state laws is available in CRS Report R41859, Unemployment Insurance: Consequences of Changes in State Unemployment Compensation Laws, by [author name scrubbed]. More general information on the sequester is available in CRS Report R42050, Budget "Sequestration" and Selected Program Exemptions and Special Rules, coordinated by [author name scrubbed].

The Workforce Investment Act of 1998 (WIA; P.L. 105-220 ) is the primary federal program that supports workforce development. WIA includes four main titles: Title I--Workforce Investment Systems--provides job training and related services to unemployed or underemployed individuals. Title I programs, which are primarily administered through the Employment and Training Administration (ETA) of the U.S. Department of Labor (DOL), include three state formula grant programs, multiple national programs, Job Corps, and demonstration programs. In addition, Title I authorizes the establishment of a One-Stop delivery system through which state and local WIA training and employment activities are provided and through which certain partner programs must be coordinated; Title II--Adult Education and Literacy--provides education services to assist adults in improving their literacy and completing secondary education; Title III--Workforce Investment-Related Activities--amends the Wagner-Peyser Act of 1933 to integrate the U.S. Employment Service (ES), which provides job search and job matching assistance to unemployed individuals, into the One-Stop system established by WIA; and Title IV--Rehabilitation Act Amendments of 1998--amends the Rehabilitation Act of 1973, which provides employment-related services to individuals with disabilities. The authorizations for appropriations for most programs under the Workforce Investment Act (WIA) of 1998 ( P.L. 105-220 ) expired at the end of FY2003. Since that time, WIA programs have been funded through the annual appropriations process. In the 108 th and 109 th Congresses, bills to reauthorize WIA were passed in both the House and the Senate; however, no further action was taken. In the 112 th Congress, the Senate Committee on Health, Education, Labor, and Pensions (HELP) released discussion drafts in June 2011 of legislation to amend and reauthorize WIA. While markup of this legislation was scheduled, it was ultimately postponed indefinitely. No legislation has been introduced. The House Committee on Education and the Workforce, however, ordered reported H.R. 4297 --the Workforce Investment Improvement Act of 2012. This bill was introduced on March 29, 2012, by Representative Virginia Foxx of North Carolina, the chair of the Subcommittee on Higher Education and Workforce Training (for herself, Representative Howard P. "Buck" McKeon of California, and Representative Joseph Heck of Nevada). A legislative hearing on H.R. 4297 was held before the full Committee on Education and the Workforce on April 17, 2012. On June 7, 2012, the committee, after considering 23 amendments to H.R. 4297 , ordered the bill reported by a vote of 23 to 15. No further action was taken on H.R. 4297 in the 112 th Congress. In the 113 th Congress, the House Committee on Education and the Workforce has ordered reported H.R. 803 --the Supporting Knowledge and Investing in Lifelong Skills Act (SKILLS Act). This bill was introduced on February 25, 2013, by Representative Virginia Foxx of North Carolina, the chair of the Subcommittee on Higher Education and Workforce Training. A legislative hearing on H.R. 803 was held before the full Committee on Education and the Workforce on February 26, 2013. On March 6, 2013, the committee, after considering four amendments to H.R. 803 , ordered the bill reported by a vote of 23 to 0. No Democrats on the committee cast a vote on the measure, maintaining that they were not provided adequate input in the process. H.R. 803 was debated in the House of Representatives on March 15, 2013, and passed by a vote of 215-202. This report summarizes each of the WIA titles and highlights the major features of H.R. 803 pertaining to each title. The report also compares the proposed provisions of H.R. 803 to current law in the following tables: Table 1. Major Provisions of Title I. This table covers provisions governing the "workforce investment systems" that provide for, among other things, state formula grants, state and local planning procedures, and the establishment of the One-Stop delivery system. WIA established the One-Stop delivery system as a way to co-locate and coordinate the activities of multiple employment programs for adults, youth, and various targeted subpopulations. The delivery of these services occurs primarily through more than 3,000 career centers nationwide. Table 2. Major Provisions of Title II. This table covers provisions for adult education and literacy activities. Table 3. Major Provisions of Title III. This table covers changes to the Wagner-Peyser Act of 1933, which was also amended in Title III of WIA. Wagner-Peyser provides authorization for the Employment Service, which provides job matching and job search assistance for unemployed individuals. Table 4. Major Provisions of Title IV of WIA and Title V of H.R. 803 . This table addresses amendments to the Rehabilitation Act of 1973, in particular to the Vocational Rehabilitation and other employment-related provisions of that act, which authorizes various employment services for individuals with disabilities. Title I of the Workforce Investment Act--Workforce Investment Systems--authorizes the establishment of a One-Stop delivery system through which state and local WIA training and employment activities are provided and through which certain partner programs must be coordinated. Title I also authorizes funding for the three major state formula grant programs (Adult, Youth, and Dislocated Worker), Job Corps (a DOL-administered program for low-income youth), and several other national programs that are directed toward subpopulations with barriers to employment (e.g., Native Americans). H.R. 803 takes a fundamentally different approach from current law to the federal role in the delivery of workforce development services by consolidating multiple programs into a single block grant that is allocated to states by formula. At the same time, H.R. 803 maintains the existing One-Stop delivery system as the delivery mechanism for employment and training services. Below is a brief summary of the major provisions of H.R. 803 . This list is followed by a thematic comparison in Table 1 of current law and H.R. 803 . H.R. 803 repeals 24 programs, activities, and provisions in WIA Title I, the Wagner-Peyser Act, and related workforce development legislation. Major Title I programs that are repealed include Youth Activities, Native American programs, Migrant and Seasonal Farmworker programs, Reintegration of Ex-Offender programs, and YouthBuild. In addition, H.R. 803 modifies several other programs to increase coordination with the WIA system. For example, H.R. 803 specifies that certain refugee assistance programs in the Department of Health and Human Services (HHS) coordinate training services with WIA programs. As part of the elimination and consolidation of multiple programs, H.R. 803 combines funding from 19 programs to create a new, single Workforce Investment Fund (WIF). From the $6.25 billion in the WIF, the Secretary of Labor would set aside $31.2 million for technical assistance and evaluations, $62.5 million for Native American employment and training programs, $1.56 billion for Job Corps, and $218.6 million for national emergency/dislocated worker activities. From the remaining $4.37 billion, $11 million would be set aside for outlying areas and $4.26 billion would be allocated to states through a new four-factor formula consisting of measures of unemployment, civilian labor force, long-term unemployment, and youth poverty. For the first three years of authorization (FY2014-FY2016), H.R. 803 provides that states would receive 100% of the relative share of funding they received under the 19 programs whose funding is consolidated into the WIF. For the remaining years of authorization (through FY2020), states would receive no less than 90% of their previous year's relative share of funding. At the state level (i.e., after funds are allocated from DOL to the states), H.R. 803 requires that each state set aside up to 15% of the state allotment for various statewide activities, including rapid response, statewide grants for individuals with barriers to employment, and administrative costs. H.R. 803 changes the composition and majority requirements of both state and local Workforce Investment Boards (WIBs). Under current law, WIBs are required to have representatives from business, labor, government, and other organizations with workforce development experience, the majority of which must represent businesses. H.R. 803 would make business representatives the only required members of WIBs, and require that two-thirds of the WIB membership be comprised of business representatives. In addition, H.R. 803 requires that local WIBs reserve a percentage of funds to carry out training activities. Under current law, there is no required percentage to be spent on training. H.R. 803 expands the requirements for state and local plans to require that WIBs indicate how they will serve the employment and training needs of various subpopulations, including at-risk and out-of-school youth, disabled workers, ex-offenders, Native Americans, migrant and seasonal farmworkers, refugees and entrants, and veterans (including disabled and homeless veterans). In addition, H.R. 803 requires that state and local plans indicate strategies to develop or strengthen industry or sector partnerships. In addition to enhanced provisions for state and local plans, H.R. 803 expands the scope of existing options for State Unified Plans. H.R. 803 allows governors to propose additional consolidation of funds into the WIF. Specifically, governors may propose to consolidate some or all of the funds from programs dedicated to employment and training activities into the WIF, subject to the approval of the secretary with jurisdiction over the program under consideration for consolidation. For example, governors may propose to consolidate some or all of the funding dedicated to employment and training in the Temporary Assistance for Needy Families (TANF) grant into the WIF, subject to approval by the Secretary of HHS. H.R. 803 combines "core" and "intensive" services into a new single category of "work ready services." Under current law, an individual typically needs to move through core and intensive services before being considered for training (this is known as the "sequence of services" provision in WIA). Under H.R. 803 , however, an individual may be determined eligible for training after an interview, evaluation, assessment, or case management by a One-Stop operator or partner, but the individual need not have necessarily received work ready services. Under current law, there is a priority of service for low-income individuals when resources are limited at One-Stop centers. H.R. 803 eliminates this priority. H.R. 803 adds incumbent worker training as an allowable training activity at the local level. Currently, incumbent worker training is an allowable statewide activity but not an allowable local activity. Finally, H.R. 803 requires that each local area hire at least one "veteran employment specialist" to carry out employment and training activities for veterans in the local area. The bill specifies that the hiring preference for this specialist should be for a disabled or other veteran. 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 funded by AEFLA typically support educational services at the secondary level and below, as well as English language training. Almost all AEFLA funding is allotted to the states via formula grants. States are required to subgrant the large majority of their funds to local providers that deliver educational services. The SKILLS Act reauthorizes AEFLA from FY2014 through FY2020 and makes largely administrative changes to the existing program. It also changes the program's accountability measures to align with the standardized measures of the SKILLS Act. The SKILLS Act authorizes $606,294,933 per year for FY2014 through FY2020. This authorization level equals the FY2012 funding level. Under current law, approximately 5% of the AEFLA appropriation is set aside for national programs and incentive grants. The SKILLS Act reduces the set-aside to 2% for modified and streamlined National Activities. The SKILLS Act does not substantially modify the formula that distributes state grants or matching requirements. It also maintains the current requirements for the portions of each state grant that must be allotted to specified activities. To receive federal funds, each state must have an approved state plan. The SKILLS Act reduces the duration of each state's plan from five years to three years and permits a state's adult education plan to be part of a State Unified Plan (described in Title I). The SKILLS Act also increases the scope of each state's required plan in several ways, such as increasing the range of stakeholders (e.g., representatives from other social service programs and postsecondary education) that must be consulted in the formulation of the state plan. The SKILLS Act also updates language and makes minor changes to state and local activities. Most notably, it replaces considerations that states must make when awarding local grants with a group of "measurable goals" that local grantees must demonstrate. Title III of the Workforce Investment Act--Workforce Investment-Related Activities--makes amendments to the Wagner-Peyser Act of 1933 (29 U.S.C. 49 et seq. ), which authorizes the Employment Service (ES). The ES is the central component of most states' One-Stop delivery systems, as ES services are universally accessible to job seekers and employers and ES offices may not exist outside of the One-Stop delivery system. ES is one of the required partners in the One-Stop delivery system. Its central mission is to facilitate the match between individuals seeking work and employers seeking workers. It has been a central component of the workforce development system through WIA. Title III adds Section 15 ("Employment Statistics") to Wagner-Peyser, which requires the Secretary of Labor to develop, provide, and improve various types of labor market information. H.R. 803 repeals Sections 1-14, which authorize the Employment Service. Funding from the ES is consolidated into the new Workforce Investment Fund. The Rehabilitation Act, as amended, authorizes grants to support programs related to employment and independent living for individuals with disabilities. The programs it funds are generally administered by the Department of Education. In FY2012, nearly 90% of the funds appropriated under the Rehabilitation Act were for Vocational Rehabilitation (VR) state grants. The SKILLS Act authorizes the VR state grants program as well as other programs under the Rehabilitation Act from FY2014 through FY2020. The programs' performance indicators are also modified to align with the standardized metrics described in Title I. The VR grants to states program is mandatory spending. The SKILLS Act authorizes $3,121,712,000 per year for the VR State Grants program for FY2014 through FY2020. This authorization is equal to the FY2012 appropriation level. Funding for the VR State Grants program, however, is determined by a formula in the Rehabilitation Act that provides an inflationary increase each year. The SKILLS Act does not amend or repeal this formula. As such, the program's funding would be determined by this formula and not its authorization level. The SKILLS Act increases emphasis on transitional services to students with disabilities. Transitional services vary by student but can generally be understood as a coordinated set of services for an eligible individual between the ages of 16 and 21 to assist that individual in moving from school activities to post-school activities and employment. The SKILLS Act requires each state to set aside at least 10% of its VR state grant funds for transition services. The act also requires each state's VR plan to include strategies for serving the transition population as well as a description of how the VR services will coordinate with transition services provided under the Individuals with Disabilities Education Act (IDEA). In addition to the VR State Grants program, the SKILLS Act authorizes approximately $317 million per year for other grant programs that are administered by the Department of Education. These programs are authorized at their FY2012 funding levels for each year from FY2014 to FY2020; the authorization level is the same each year. The largest authorization among these programs is National Institute on Disability and Rehabilitation Research (NIDRR) grants, which is authorized at $109 million per year. The SKILLS Act also extends authorization through FY2020 for the National Council on Disability ($3.3 million per year) and the Access Board ($7.4 million per year). The SKILLS Act repeals four authorizations. The Supported Employment State Grants program ($29 million appropriation in FY2012) is repealed and its functions are absorbed by the VR state agencies. Three competitive grant programs (two of which were unfunded in FY2012) are also repealed.

The Workforce Investment Act of 1998 (WIA; P.L. 105-220) is the primary federal program that supports workforce development activities, including job search assistance, career development, and job training. WIA established the One-Stop delivery system as a way to co-locate and coordinate the activities of multiple employment programs for adults, youth, and various targeted subpopulations. The delivery of these services occurs primarily through more than 3,000 One-Stop career centers nationwide. The authorizations for appropriations for most programs under the WIA expired at the end of FY2003. Since that time, WIA programs have been funded through the annual appropriations process. In the 108th and 109th Congresses, bills to reauthorize WIA were passed in both the House and the Senate; however, no further action was taken. In the 112th Congress, the Senate Committee on Health, Education, Labor, and Pensions (HELP) released discussion drafts in June 2011 of legislation to amend and reauthorize WIA. While markup of this legislation was scheduled, it was ultimately postponed indefinitely. No legislation has been introduced. The House Committee on Education and the Workforce ordered reported H.R. 4297--the Workforce Investment Improvement Act of 2012, on June 7, 2012, by a vote of 23 to 15. This legislation would have amended and reauthorized WIA. No further action was taken on H.R. 4297 in the 112th Congress. In the 113th Congress, the House Committee on Education and the Workforce has ordered reported H.R. 803--the Supporting Knowledge and Investing in Lifelong Skills Act (SKILLS Act). This bill was introduced on February 25, 2013, by Representative Virginia Foxx of North Carolina, the chair of the Subcommittee on Higher Education and Workforce Training. A legislative hearing on H.R. 803 was held before the full Committee on Education and the Workforce on February 26, 2013. On March 6, 2013, the committee, after considering four amendments to H.R. 803, ordered the bill reported by a vote of 23 to 0. H.R. 803 was debated in the House of Representatives on March 15, 2013, and passed by a vote of 215-202. H.R. 803 would maintain the One-Stop delivery system established by WIA but would repeal numerous programs authorized by WIA and other federal legislation, and it would consolidate other programs into a new single funding source--the Workforce Investment Fund. Adult Education and Vocational Rehabilitation retain separate titles and funding in H.R. 803. This report first provides a brief introduction to the four main titles of WIA and then compares the proposed provisions of H.R. 803 to the current law provisions by each of the four titles.

The National Telecommunications and Information Administration (NTIA), a part of the Department of Commerce, is the executive branch's principal advisory office on domestic and international telecommunications and information technology issues and policies. Among its objectives, it has a mandate to provide greater access for all Americans to telecommunications services; to provide support for U.S. attempts to open foreign telecommunications and information markets; to advise the Secretary of Commerce, the President, and Vice President and the executive branch in international telecommunications and information negotiations; to fund research grants for new technologies and their applications; and to assist non-profit organizations in converting to digital transmission in the 21 st century. Generally, congressional policymakers have supported the NTIA's mandate and objectives through the appropriations process. The recent history of the NTIA budget, FY2000-FY2007, is as follows (appropriations for FY2008 will be included once the final bill has been passed): It should be noted that in FY2001, the Clinton Administration requested additional funding for digitizing existing public broadcasting transmissions and construction of new public digital broadcasting facilities. While the final appropriations did not match the Clinton Administration's request of $423 million, it represented a substantial increase in NTIA's historical budget. Congress has generally maintained consistent funding for NTIA in its appropriations, regardless of the request. For FY2009 , the Bush Administration has proposed a continued reduction in the NTIA budget, primarily reflected in eliminating NTIA's program to construct and maintain public telecommunications facilities. The Administration also sees NTIA having a larger role in national emergency planning (see below). Until FY2004, the NTIA budget had three major components: salaries and expenses; information infrastructure grants programs; and public telecommunications facilities, planning and construction. However, the infrastructure grants program was eliminated in FY2005. In both FY2006 and FY2007, the Bush Administration requested ending funding for the public telecommunications facilities, planning and construction program. This portion of the NTIA budget includes funding to maintain ongoing programs for domestic and international policy development, federal spectrum and related research. For FY2009, the Bush Administration has requested $19.2 million. According to the Administration, this would sustain current efforts to provide basic research, analytical, and management topics of interest to the U.S. telecommunications and information sectors of the economy. Other administrative and policy responsibilities that fall to NTIA but are not separate program functions include domestic and international telecommunications policymaking. The NTIA advises the President, Vice President and Secretary of Commerce on international telecommunications treaties and represents U.S. positions and policies at international conferences, such as the World Radio Conference held by the International Telecommunication Union. The NTIA also advises the executive branch on ways to implement the 1996 Telecommunications Act ( P.L. 104-104 ), further competition in telecommunications and develop "technology neutral" telecommunications policies. At the same time, it has produced a series of reports on the "digital divide" in America--who comprises this divide and what policies may help close the divide. The NTIA also is overseeing the transition of the management of the Internet domain name system to the private sector. Spectrum Policy. Among the many administrative functions that also fall under salaries and expenses is management of the U.S. spectrum for federal use. The Federal Communications Commission (FCC) has the primary role of managing the non-federal portion of the spectrum, which not only includes private sector use, but state and local government use of the spectrum as well. The NTIA also advises the President and executive branch on national spectrum policy, manages the federal portion of the spectrum for public safety use, and encourages policies that provide greater private sector use of existing broadcast spectrum. Domain Names. The Department of Commerce, through NTIA, maintains formal oversight over the International Corporation for Assigned Names and Numbers (ICANN), the private, non-profit corporation which serves as the technical coordinator of the domain name system. ICANN's authority is governed by a Memorandum of Understanding (MOU) with the Department of Commerce and NTIA. The MOU was intended to provide the transition of the management of the domain name system to the private sector, with the United States and other governments participating as minority stakeholders. The NTIA is currently the accredited U.S. government's representative to ICANN's Government Advisory Committee (GAC). Digital Transition. The third NTIA program that the Bush Administration has requested funding for comes out of the 2005 Deficit Reduction Act. That law--and new NTIA program--called for the creation of a Digital Transition and Safety Public Fund, which offset receipts from the auction of licenses to use electromagnetic spectrum recovered from discontinued analog television signals. The Bush Administration began setting these reimbursable funds at $45 million in FY2007. The receipts would fund the following programmatic functions at NTIA: a digital-analog converter box program to assist consumers in meeting the 2009 deadline for receiving television broadcasts in digital format; public safety interoperable communications grants, which will be made to ensure that public safety agencies have a standardized format for sharing voice and data signals on the radio spectrum; New York City 9/11 digital transition funding, until the planned Freedom Tower is built; assistance to low-power television stations, for conversion from analog to digital transition; a national alert and tsunami warning program; and funding to enhance a national alert system as stated in the ENHANCE 911 Act of 2004. The PTFPC program in NTIA assists public broadcasting stations, state and local governments, Indian tribes, and non-profit organizations construct facilities to bring educational and cultural programs to the U.S. public using broadcast and non-broadcast telecommunications and information technologies. The program provides competitive grants to public broadcasting organizations to plan, buy and employ new broadcast equipment and services nationwide. The public broadcast system had a mandate to convert all of its television broadcasts to digital by May 31, 2003. The Corporation for Public Broadcasting has reported that most, but not all, of its public broadcast members have me that goal. For FY2009, the Bush Administration has requested zero funding, to close out existing digital construction and conversion projects and to end NTIA's role in this area. The Bush Administration is seeking to place all funding for construction of public broadcasting facilities and conversion of analog broadcast to digital in the federal funding for the Corporation for Public Broadcasting, so it can expedite digital conversion. In FY2005 , the Bush Administration requested the termination of NTIA's information infrastructure grants program, called the Technology Opportunity Program (TOP). Congress agreed with this request and eliminated funding for this program. TOP was a competitive, merit-based matching grant program that was started in FY1994 to provide emerging telecommunications and information technologies to grant recipients in new and innovative ways. The Bush Administration and Congress agreed that this program had successfully served its purpose of creating new pilot programs in areas not served or underserved by telecommunications and Internet technologies. While some policymakers have called for new funding for this program, no new legislation authorizing appropriations has been introduced to date. Policymakers continue to examine the proper role of NTIA in supporting its programs and policies, as well as the overall budget for NTIA to support its mission. According to some, the Telecommunications Act of 1996 set into law a de-regulatory environment that requires less, not more, federal direction of telecommunications and information technology use. The explosive growth of the Internet since the mid-1990s has reached nearly every part of America, and Internet access is virtually ubiquitous. Therefore, beyond budget issues, the role of NTIA has changed in some policy areas. Two important issues facing NTIA's administration of public telecommunications policy are domain name registration and use of spectrum. Regarding domain names, the expiration of the Department of Commerce/NTIA MOU with ICANN on September 30, 2006, has led to speculation over whether, and how, the MOU might be renewed. IT also has raised concerns over the extent to which (if at all) NTIA might ultimately relinquish control over ICANN and the domain name system. Second, some are concerned that NTIA is seeking to develop a larger and broader policy role in spectrum management as a result of losing funding in other program areas, such as the TOP program and perhaps eventually the PTFPC program. Because spectrum and its use is an important alternative to terrestrial communications transmission and reception, federal policy regarding its use and applications is an important national issue. Some question whether NTIA's evolving role in spectrum management is being fully coordinated with other federal institutions, such as that of the Federal Communications Commission. A second important issue is the role of NTIA in the auction and management of spectrum. The third NTIA program that is administered by NTIA but not directly funded by appropriated money comes out of the 2005 Deficit Reduction Act. That law ( P.L. 109-171 ) called for the creation of a Digital Transition and Safety Public Fund, which would provide funding for further use of the electromagnetic spectrum, by offsetting receipts received from the auction of licenses to use the older analog spectrum for other purposes. The initial auction was held on January 24, 2008. The receipts from the auction will fund the following programmatic functions at NTIA, perhaps the most notable (and receiving the most public attention) is a digital-analog converter box program to assist consumers in meeting the February 2009 deadline for receiving television broadcasts in digital format. Congress is watching this transition period, and NTIA's role in it, very closely. Concerns about changes in NTIA's mission and objectives also has been raised regarding the Bush Administration's elimination of funding for the TOP program and reducing funding for the PTFPC program. The Administration contends that the efforts of the former will be picked up by the private sector, and the latter by the Corporation for Public Broadcasting. Some still contend that it is not clear whether all of the possible areas of information infrastructure development have been saturated through the TOP program; or if not yet saturated, whether industry will find it profitable to provide the "last mile" of telecommunications and Internet connections in areas not yet served. For public telecommunications and facilities planning and construction, an issue may arise as to whether the Corporation for Public Broadcasting has the resources to administer a facilities construction program. The ultimate question may be whether this change will fundamentally affect the pace at which national broadcasting is converted to digital transmission.

For FY2009, the Bush Administration has proposed a budget of $19.2 million for NTIA, with this money going towards administrative functions. There would be no funding under another NTIA program, which supports public telecommunications facilities planning and construction. Under the FY2008 enacted appropriation ( P.L. 110-161 ) NTIA is funded at $36.3 million, which was $3.3 million below the FY2007 enacted and $17.7 million above the President's request. There are two major components to the NTIA appropriated budget (a third program, which is a revolving fund based on spectrum auctions, is discussed below). The first is Salaries and Expenses. For FY2008, the Bush Administration recommended $18.6 million; Congress approved $17.5 million for FY2008. In the past, a large part of this program has been for the management of various information and telecommunications policies both domestically and internationally. For the second NTIA component, the Public Telecommunications and Facilities Program (PTFPC), the Bush Administration has requested that this program's funding be eliminated, arguing that most of the construction and refurbishing of public telecommunications facilities has already been done, and that any remaining support that is needed should come from local public broadcasting entities. However, for FY2008, Congress disagreed, citing the ongoing need for upgrading of public broadcasting facilities, particularly as the deadline of converting all analog broadcasts to digital in 2009 approaches. For FY2008, Congress funded this program at $18.8 million. Under at third program, NTIA operates a revolving fund which uses offset receipts from the auction of licenses recovered from discontinued analog signals. An important part of this program is to fund a digital-analog converter box program to assist consumers in meeting the February 2009 deadline for receiving television broadcasts in digital format.

Although party divisions sprang up almost from the First Congress, the formally structured party leadership organizations now taken for granted are a relatively modern development. Constitutionally specified leaders, namely the Speaker of the House and the President pro tempore of the Senate, can be identified since the first Congress. Other leadership posts, however, were not officially recognized until about the middle of the 19 th century, and some are 20 th century creations. The following tables identify 15 different party leadership posts beginning with the year when each is generally regarded to have been formally established. The tables herein present data on service dates, party affiliation, and other information for the following House and Senate party leadership posts: House Positions 1. Speakers of the House of Representatives, 1789-2017 2. House Republican Floor Leaders, 1899-2017 3. House Democratic Floor Leaders, 1899-2017 4. House Democratic Whips, 1901-2017 5. House Republican Whips, 1897-2017 6. House Republican Conference Chairs, 1863-2017 7. House Democratic Caucus Chairs, 1849-2017 Senate Positions 8. Presidents Pro Tempore of the Senate, 1789-2017 9. Deputy Presidents Pro Tempore of the Senate, 1977-2017 10. Permanent Acting President Pro Tempore of the Senate, 1964-2017 11. Senate Republican Floor Leaders, 1919-2017 12. Senate Democratic Floor Leaders and Conference Chairs, 1893-2017 13. Senate Republican Conference Chairs, 1893-2017 14. Senate Democratic Whips, 1913-2017 15. Senate Republican Whips, 1915-2017 This information reflects the leadership elections and appointments at the start of the 115 th Congress. Included for each post are leaders' names, party and state affiliations, and dates and Congresses of service. For most Congresses, the report indicates years of service only, except in the tables for the House Speaker and the Senate President pro tempore, both of which include specific dates of service. When a Member died while holding a leadership office, however, the date of death is included as the end-of-service date (except in Table 13 ). In cases where a leadership change occurs during the course of a Congress, exact dates of service are indicated where possible. With respect to length of service, the report includes all instances in which a Member held a particular leadership post, regardless of whether the Member held the post for the entire Congress or only a portion of it. Official congressional documents ( House Journal and Senate Journal , Congressional Record , and predecessor publications) can be used to document the tenure of the constitutionally specified leaders (i.e., Speaker and President pro tempore). The actions of the party organizations in choosing other leaders, such as floor leaders or caucus or conference chairs, frequently went unacknowledged in these sources, however. In the frequent absence of party caucus records in the latter half of the 19 th century, scholars have had to rely on secondary sources, such as memoirs and correspondence, for evidence of party leadership position-holding. The concluding portion of this report, " Source Notes and Bibliography ," provides more information about sources and the reliability of leadership lists. The changing nature of congressional leadership provides additional challenges to identifying leaders not constitutionally specified (e.g., floor leader). Even for party elected posts, determining who held other positions can be problematic in earlier Congresses. For example, identifying each party's conference (or caucus) chair often requires reliance on incomplete historical records of conference meetings or inferences made from informal practices (e.g., noting which Member nominated his party's candidate for Speaker, a motion that often fell to the conference chair). In the House, for example, it was the common practice of President Thomas Jefferson and his immediate successors to designate a Member as their principal legislative spokesman. Often these spokesmen held no other formal leadership position in the House, and Presidents frequently designated new spokesmen, or even specialized spokesmen for individual measures, as their terms progressed. As these and other "leaders" were not chosen by a congressional party group or by a party leader such as the Speaker, these presidential designees have not been included here as "party leaders." Most historians who study the 19 th -century House acknowledge that an informal "positional leadership" system emerged possibly as early as the "War Hawk" Congress (1811-1813) under Speaker Henry Clay. Under this system, the Speaker--who at the time designated the chairmen of the standing committees--would name his principal lieutenant to be chairman of the Ways and Means Committee. After the Appropriations Committee was split from the Ways and Means Committee in 1865, the Speaker's principal floor lieutenant received either of these chairs. Sometimes, the Speaker chose a rival for the speakership to chair one of these committees in an effort to resolve intra-party disputes. It is somewhat inaccurate, however, to consider these early leaders to be majority leaders in the modern sense, and they have not been included here. The position of chair of the Appropriations or Ways and Means Committee inevitably made the incumbent a powerful congressional figure because of the important legislation reported from these committees. These chairs were not, however, chosen in a vote by the full party organization, as the majority or minority House leaders are now. Furthermore, other leading congressional figures, such as the Republican leader Thomas Brackett Reed, achieved their positions of influence within the House by service on other committees, such as--in Reed's case--the post-1880 Rules Committee. The Senate developed an identifiable party leadership later than the House. The few existing records of party conferences in the 19 th -century Senate are held in private collections. Memoirs and other secondary sources reveal the identities of party conference or caucus chairs for some, but not all, Congresses after about 1850; these posts, however, carried very little authority. It was not uncommon for Senators to declare publicly that within the Senate parties there was no single leader. Instead, through the turn of the 20 th century, individuals who led the Senate achieved their position through recognized personal attributes, including persuasion and oratory skills, rather than the current practice of election to most official leadership posts. The development of Senate party floor leaders was one of slow evolution, like the House, but they arose for the most part from the post of conference chair. Not until 1945 did Senate Republicans specify that the conference chair and floor leader posts must be held by separate Senators. Among Senate Democrats, the floor leader is also chair of the conference. In many secondary sources, Senators are identified as "floor leaders" before existing party conference records so identify them. In this report, footnotes to the tables attempt to clarify when a leader was identified through official sources such as caucus minutes or through secondary sources. Another problem in identifying party leaders in early Congresses is the matter of party affiliation. Secondary sources reporting on party leaders often relied upon the information compiled in early editions of the Biographical Directory of the United States Congress . As the editors of the 1989 edition of the Biographical Directory noted: The most serious source of error and confusion in previous editions [of the Biographical Directory ] [was] the designations of party affiliation. Many of the party labels added to the editions of 1913 and 1928 were anachronistic, claiming for the two modern parties Senators and Representatives elected to Congress before the [modern] Democratic or Republican parties existed. Other entries ignored the frequent shifts in party affiliation during the nineteenth century or omitted reference to short-lived and regional political parties and thus failed to reflect the vigor and diversity of nineteenth-century politics. The 1989 and 1997 editions of the Biographical Directory resolved these differences, and their designations of party affiliations are principal sources for this report. The 1997 edition of the Biographical Directory , in particular, included more complete notations where Members changed their party affiliations while serving in Congress. The main source for early party affiliations of Senator leaders, principally Presidents pro tempore, is volume four of Senator Robert C. Byrd's The Senate, 1789-1989 (Historical Statistics, 1789-1992) . An Appendix explains the abbreviations used to denote party affiliations in this report. The tables in this report exclude some leadership posts in order to render manageable the amount of data provided. Specifically, the Senate and House party conference secretaries and the chairs of party committees (e.g., steering committees, policy committees, committees on committees, and campaign committees) are not presented here. Junior party whips are also not identified. At least since the 1930s in the House, both parties have selected (or allowed the principal whip to designate) subordinate whips. The lack of adequate records makes it almost impossible to identify all deputy whips, regional whips, and zone whips who have been appointed in the past 70 years. The position of Speaker is constitutionally specified in Article 1, Section 2. The Speaker is the only party leader who is chosen by a roll-call vote of the full House of Representatives, which occurs after each party has nominated a candidate for the position when a new Congress convenes. House rules give the Speaker various formal duties. These include, for example, administering the oath of office to new Members, signing House-passed bills and resolutions, presiding over the House (and making rulings on the presence of a quorum, points of order, etc.), referring measures to committees, and naming the party's slate of members for certain committee positions. Each party conference cedes additional powers and responsibilities to a Speaker from its own party, including influence over the makeup of certain standing committees. For more information, consult CRS Report 97-780, The Speaker of the House: House Officer, Party Leader, and Representative , by [author name scrubbed], and CRS Report RL30857, Speakers of the House: Elections, 1913-2017 , by [author name scrubbed] and [author name scrubbed]. At an organizational meeting prior to the beginning of a new Congress, each party conference (or caucus) in the House selects its floor leader (also called majority leader or minority leader, as appropriate) in a secret-ballot vote. The majority party floor leader works closely with the Speaker and is largely responsible for the party's daily legislative operations in consultation with other party leaders. Similarly, the minority party floor leader directs the party's ongoing legislative strategies and operations and typically serves as the spokesperson for the party in the House. Each party assigns additional responsibilities to its respective floor leader. For more information on the majority party floor leader position, see CRS Report RL30665, The Role of the House Majority Leader: An Overview , by [author name scrubbed]. Each House party caucus currently elects its own party whip at organizational meetings as a new Congress begins. House Republicans (or a representative group of their conference) have always elected their party whips; Democrats in the House appointed a chief whip until 1986. Chief deputy whips are currently appointed by the party's chief whip; additional members to serve in the whip team are either similarly appointed or, instead, elected by subsets of the caucus. The whip organization is responsible for assessing the passage prospects for upcoming measures, mobilizing member support for leadership priorities, informing the party rank-and-file regarding legislative scheduling and initiatives, and informing the top party leadership regarding the sentiment of the rank-and-file. For more information, see archived CRS Report RS20499, House Leadership: Whip Organization , by [author name scrubbed]. The Republican Conference and the Democratic Caucus are the organizations of the members of the respective parties in the House. Each conference has an elected chair, who presides over its meetings. Decisions made by the conference (and often publicly promulgated by the chair) are generally regarded as the collective sentiment of the respective House party contingent. Pursuant to Article 1, Section 3, of the U.S. Constitution, the President pro tempore of the Senate is the chamber's presiding officer in the absence of the President of the Senate (the Vice President of the United States). The President pro tempore is elected by the full Senate as the formal institutional leader and, in current practice, is the longest-serving member of the majority party. Until 1890, the Senate elected a President pro tempore whenever the Vice President was not in attendance, whether for a day or permanently, as in the case of the Vice President's death or resignation. When the Vice President returned, the President pro tempore lost his place. When the Vice President was again absent, the Senate again elected a President pro tempore--in many cases the same Senator who had been chosen before. By the standing order agreed to on March 12, 1890, the Senate declared that the President pro tempore shall hold the office during "the pleasure of the Senate and until another is elected, and shall execute the duties thereof during all future absences of the Vice President until the Senate does otherwise order." The Senate's President pro tempore is, pursuant to statute, currently third in the line of presidential succession (behind the Vice President and the Speaker of the House). In the Succession Act of 1792, the position was initially designated to serve in line after the Vice President. An 1886 act altered the succession line by replacing congressional leaders with cabinet secretaries, but the President pro tempore post was reinstated in the line (in the current position) in 1947. As presiding officer, the President pro tempore has the power to decide points of order and enforce decorum on the floor. The President pro tempore has other formal powers (e.g., appointing conferees; appointing certain Senate officers; and serving on, or appointing others to, working groups, commissions, and advisory boards). However, because the direction of Senate business has fallen in modern times to the majority leader, almost all of these powers are actually exercised by the majority leader in practice. As explained in the notes to Table 9 and Table 10 below, the Senate has also had past occasion to select a Deputy President pro tempore and a Permanent Acting President pro tempore. For more information on the President pro tempore (and the deputy and acting posts), consult CRS Report RL30960, The President Pro Tempore of the Senate: History and Authority of the Office , by [author name scrubbed]. The Senate has, on occasion, created special offices connected to the position of President pro tempore. These two positions--detailed below--were created for specific individuals under narrow circumstances and are not currently in use. Pursuant to S.Res. 17 (95 th Congress), agreed to January 10, 1977, the Senate established (effective January 5, 1977) the post of Deputy President pro tempore of the Senate to be held by "any Member of the Senate who has held the Office of President of the United States or Vice President of the United States." Senator Hubert H. Humphrey was Deputy President pro tempore until his death on January 13, 1978. In the 100 th Congress, due to concerns over the health of the President pro tempore, Senator John S. Stennis, the Senate agreed on January 28, 1987, to S.Res. 90 , authorizing the Senate to designate a Senator to serve as Deputy President pro tempore during that Congress in addition to Senators who hold such office under the authority of S.Res. 17 (95 th Congress). Accordingly, on the same date, the Senate agreed to S.Res. 91 (100 th Congress), designating Senator George H. Mitchell Deputy President pro tempore. This post was initially established in 1963 after Senate Majority Leader Michael J. Mansfield became concerned that the stamina of then-President pro tempore Senator Carl T. Hayden would be overly taxed by presiding over the prolonged debate on civil rights legislation. In response, the Senate adopted S.Res. 232 and S.Res. 238 (88 th Congress), making Senator Lee Metcalf Acting President pro tempore from December 9, 1963, until the meeting of the second session of the 88 th Congress. Continuing concerns over the presiding officer's responsibilities led the Senate, on February 7, 1964, to authorize Senator Metcalf "to perform the duties of the Chair as Acting President pro tempore until otherwise ordered by the Senate" via S.Res. 296 (88 th Congress). Senator Metcalf held the post throughout his remaining 14 years in the Senate. Each Senate party conference selects its floor leader (also called majority leader or minority leader, as appropriate) in a secret-ballot vote at its organizational meeting prior to the beginning of a new Congress. While these positions developed later than (and arose from) the post of conference chair, they now represent the top post in each party. The majority leader is the lead spokesperson for the party in the chamber and is also responsible for scheduling the legislative activity of the Senate. By precedent established in 1937, the majority leader is afforded priority recognition on the floor. The minority leader leads and speaks for the minority party and is consulted by the majority leader in scheduling Senate floor activity; he also has preferential floor recognition, after the majority leader. The rules of each party conference assign additional responsibilities to each floor leader, as well. In current practice, the floor leader for Senate Democrats also serves as the party's conference chair. (See next section for description of conference chair positions.) Each party has a conference organization consisting of all the elected Senators from that party; it is the main body through which the party contingent at large decides and communicates its legislative priorities. While each party's conference chair posts were the first formal party leadership positions in the Senate, eventually floor leader positions were established as uppermost in each party's leadership hierarchy. Since 1945, Republicans have elected their conference chairs separately from other leadership posts, but the elected Democratic floor leader also serves as chair of the Democratic Conference. (See Table 12 for the list of Democratic floor leaders/conference chairs.) Senate Democrats first selected a party whip in 1913; Republicans followed in 1915. Some accounts of these early selections imply that the individuals were initially appointed, but other contemporary accounts refer to conference elections for the posts. (Republicans first formally codified their conference procedures in 1944, making it clear that the whip post was elected by the conference.) Today, each party conference elects a party whip (sometimes called the assistant majority leader or assistant minority leader, depending on the party). Typically, deputy whips are also appointed to assist the whip operation. The whips communicate leadership priorities to the party rank-and-file (and vice versa), provide leaders an assessment of member support for (or opposition to) pending legislative matters, and mobilize support for leadership-supported measures under consideration. For more information, see archived CRS Report RS20887, Senate Leadership: Whip Organization , by [author name scrubbed]. This report relies heavily on primary congressional sources and authoritative documents such as the privately printed Biographical Directory of the American Congress, 1774 to 1996 , and a similar online adaptation, the Biographical Directory of the United States Congress, 1774 to the Present . In addition, over the years, individual Members of Congress, legislative aides, and scholars have gained limited access to party conference journals. Reliable leadership lists have been compiled from these sources. Where these have been published, they have been used as a source in this report. This report also relies on secondary sources developed by scholars. The Congressional Research Service made no attempt to gain access to caucus or conference minutes in collecting data for this report. Inevitably, conflicting interpretations occur in these data, even among sources generally accepted as reliable. For example, there are disparities on the dates of elections and tenure of Senate Presidents pro tempore among Byrd's history, the 1911 Senate document, and Gamm and Smith's research. The report attempts to footnote these divergences where they occur. Unless otherwise noted, the following sources were used to compile the tables in this report: Berdahl, Clarence. "Some Notes on Party Membership in Congress." American Political Science Review , vol. 43 (April 1949), pp. 309-332; (June 1949), pp. 492-508; and (August 1949), pp. 721-734. Biographical Directory of the American Congress , 1774-1996 . Washington: CQ Staff Directories, Inc., 1997. Biographical Directory of the United States Congress, 1774 to the Present. Available at http://bioguide.congress.gov/biosearch/biosearch.asp . Byrd, Robert C. The Senate, 1789-1989 . 4 vols., 100 th Congress, 1 st session. S. Doc. 100-20. Washington: GPO, 1988-1993. Cannon, Clarence. "Party History." Remarks in the appendix, Congressional Record , vol. 89 (January 22, 1941), pp. A383-A384. Congressional Directory . Washington: GPO, various years. Congressional Globe . Washington, 1833-1873. Congressional Quarterly Weekly Report . Washington: Congressional Quarterly, Inc., various dates. Congressional Record . Washington: GPO, 1873-present. CRS Report RL30960, The President Pro Tempore of the Senate: History and Authority of the Office , by [author name scrubbed]. Deschler, Lewis. Deschler-Brown Precedents of the United States House of Representatives. 16 vols. Washington: GPO, 1977-2000. Galloway, George B. "Leadership in the House of Representatives." The Western Political Quarterly , vol. 12, no. 2, (June 1959), pp. 417-441. Gamm, Gerald and Steven S. Smith. "Last Among Equals: The Senate's Presiding Officer." In Burdett A. Loomis, ed., Esteemed Colleagues: Civility and Deliberation in the U.S. Senate , pp. 105-134. Washington: Brookings Institution Press, 2000. Martis, Kenneth C. The Historical Atlas of Political Parties in the United States Congress, 1789-1989. New York: Macmillan, 1989. Oleszek, Walter J. Majority and Minority Whips in the Senate : History and Development of the Party Whip System in the U.S. Senate . 99 th Congress, 1 st session. S. Doc. 99-23. Washington: GPO, 1985. ----. "John Worth Kern: Portrait of Floor Leader." In Richard A. Baker and Roger H. Davidson, eds., First Among Equals: Outstanding Senate Leaders of the Twentieth Century , pp. 7-37. Washington: CQ Press, 1991. Ripley, Randall B. Party Leaders in the House of Representatives. Washington: Brookings Institution Press, 1967. ----. "The Party Whip Organizations in the United States House of Representatives." American Political Science Review , vol. 58 (September 1964), pp. 561-576. Rothman, David J. Politics and Power . Cambridge, MA: Harvard University Press, 1966. U.S. Congress. Hinds' and Cannon's Precedents of the House of Representatives of the United States . 11 vols. Washington: GPO, 1907-1908, 1935-1941. ----. House. Journal of the House of Representatives of the United States , 1789-present, various publishers. ----. Senate. Journal of the Senate of the United States , 1789-present, various publishers. ----. Majority and Minority Leaders of the Senate: History and Development of the Offices of the Floor Leaders . Prepared by Floyd M. Riddick. 99 th Congress, 1 st session. S. Doc. 99-3. Washington: GPO, 1985. ----. President of the Senate Pro Tempore . 62 nd Congress, 2 nd session. S.Doc. 62-101. Washington: GPO, 1911. Widenor, William C. "Henry Cabot Lodge: The Astute Parliamentarian," In Richard A. Baker and Roger H. Davidson, eds., First Among Equals: Outstanding Senate Leaders of the Twentieth Century , pp. 38-62. Washington: CQ Press, 1991.

This report briefly describes current responsibilities and selection mechanisms for 15 House and Senate party leadership posts and provides tables with historical data, including service dates, party affiliation, and other information for each. Tables have been updated as of the report's issuance date to reflect leadership changes. Although party divisions appeared almost from the First Congress, the formally structured party leadership organizations now taken for granted are a relatively modern development. Constitutionally specified leaders, namely the Speaker of the House and the President pro tempore of the Senate, can be identified since the First Congress. Other leadership posts, however, were not formally recognized until about the middle of the 19th century, and some are 20th-century creations. In the earliest Congresses, those House Members who took some role in leading their parties were often designated by the President as his spokesperson in the chamber. By the early 1800s, an informal system developed when the Speaker began naming his lieutenant to chair one of the most influential House committees. Eventually, other Members wielded significant influence via other committee posts (e.g., the post-1880 Committee on Rules). By the end of the 19th century, the formal position of floor leaders had been established in the House. The Senate was slower than the House to develop formal party leadership positions, and there are similar problems in identifying individual early leaders. For instance, records of party conferences in the 19th century Senate are not available. Memoirs and other secondary sources reveal the identities of party conference or caucus chairs for some, but not all, Congresses after about 1850, but these posts carried very little authority. It was not uncommon for Senators to publicly declare that within the Senate parties, there was no single leader. Rather, through the turn of the 20th century, individuals who led the Senate achieved their positions through recognized personal attributes, including persuasion and oratorical skills, rather than election or appointment to formal leadership posts. The formal positions for Senate party floor leaders eventually arose from the position of conference chair. Owing to the aforementioned problems in identifying informal party leaders in earlier Congresses, the tables in this report identify each leadership position beginning with the year in which each is generally regarded to have been formally established. The report excludes some leadership posts in order to render the amount of data manageable. A bibliography cites useful references, especially in regard to sources for historical data, and an appendix explains the abbreviations used to denote political parties. This report will be updated as changes in House and Senate party leadership positions occur.

On May 10, 2010, President Obama transmitted the proposed text of the U.S.-Russian civilian nuclear cooperation agreement to Congress for approval, along with the required Nuclear Proliferation Assessment Statement (NPAS) and his determination that the agreement promotes U.S. national security. The annexed classified NPAS was to be submitted separately. The agreement was signed by the two countries in Moscow on May 6, 2008. President George W. Bush first submitted it to Congress on May 13, 2008, but in September 2008 rescinded the national security determination following Russian military actions in the Republic of Georgia. This had the effect of removing the agreement from congressional consideration. President Obama stated his commitment to seeing the agreement enter into force in summit statements with Russian President Medvedev in April and July 2009. President Obama's May 10, 2010, letter of transmittal says that the situation in Georgia is no longer an obstacle and that "the level and scope of U.S.-Russian cooperation on Iran are sufficient to justify resubmitting the proposed agreement." According to President Obama's letter, the agreement meets all the terms of the Atomic Energy Act and therefore does not require any exemptions from the law's requirements. Therefore, the agreement would enter into effect after a 30-day consultation period and a review period of 60 days of continuous session unless Congress enacted a joint resolution of disapproval. Congress also had the option of adopting either a joint resolution of approval with (or without) conditions, or standalone legislation that could approve or disapprove the agreement. The agreement permits the export, subject to licensing, of technology, material, equipment, and components for nuclear research and nuclear power production. The agreement does not permit transfer of restricted data. The agreement needs to be amended before any transfer of sensitive nuclear technology, sensitive nuclear facilities, and major critical components of those facilities. The parties would also need to agree to reprocessing of material transferred under the agreement. Some limited enrichment and blending or down-blending for LEU fuel production would be permitted. The bilateral nuclear cooperation agreement between the United States and Russia entered into force after an exchange of diplomatic notes on January 11, 2011. At the entry into force ceremony, U.S. officials emphasized that the agreement would improve cooperation in nuclear terrorism prevention, nonproliferation, and development of new nuclear technologies. Section 123 of the U.S. Atomic Energy Act (AEA) of 1954 (42 U.S.C. 2011 et seq.) governs significant nuclear cooperation between the United States and other states. The United States has agreements for civil nuclear cooperation in place with almost 50 countries. Such agreements, known as "123 agreements," provide the framework and authorization for cooperation, but do not guarantee certain exports, technology, or material. Before significant nuclear exports can occur, the State Department, with the advice of the Department of Energy, negotiates an agreement, which must meet criteria listed in Section 123.a., (1) through (9), 42 U.S.C. 2151. Cooperation between the United States and Russia on civilian nuclear energy is not new, but the level has fluctuated depending on broader political developments. The United States and the Soviet Union concluded a limited 10-year agreement for nuclear cooperation in 1973 to allow for cooperation in controlled thermonuclear fusion, fast breeder reactors, and fundamental research. The 1973 agreement also established a Joint Committee on Cooperation in the Peaceful Uses of Atomic Energy that was to meet annually. This agreement was extended in 1983 and in 1988, and exchanges on safety practices significantly increased after the 1986 Chernobyl power plant accident. The two superpowers convened a Joint Coordinating Committee for Civilian Reactor Safety starting in 1988. After the fall of the Soviet Union and prior to July 2006, Moscow's nuclear commerce with Iran presented the chief obstacle to concluding a broad U.S.-Russian nuclear cooperation under section 123. Project-specific agreements were concluded throughout this period. Several factors may have contributed to the shift in U.S. policy under the George W. Bush Administration: a tougher line by Moscow since 2003 with respect to Iran, especially Russia's agreement with Iran to take back spent nuclear fuel from the Russian-built Bushehr reactor; President Bush's embrace of nuclear power as an alternative to reliance on hydrocarbons; President Bush's proposals to multi-lateralize the nuclear fuel cycle and develop proliferation-resistant technologies through the Global Nuclear Energy Partnership (GNEP); and Russia's own proposals to host an international fuel center that would store and reprocess spent fuel and enrich uranium for fresh fuel. Under the Obama Administration, officials have expressed support for the nuclear cooperation agreement with Russia, but were waiting for the "appropriate time" to submit the agreement to Congress. President Obama's letter of May 10, 2010, outlines ways in which the current Administration sees this agreement as being beneficial for U.S. interests, primarily in that it would contribute to "the growth of clean, safe and secure nuclear energy for peaceful purposes." The letter cites several areas of recent "progress" in cooperation between the United States and Russia: Russian support for a new United Nations Security Council Resolution on Iran. Signature on April 8, 2010, of the New START Treaty that would reduce the number of deployed strategic nuclear weapons. Signature on April 13, 2010, of the Protocol to amend the 2000 U.S. Russian Plutonium Management and Disposition Agreement, which will dispose of at least 34 metric tons of excess weapons plutonium in each country. Russia's establishment of an international nuclear fuel reserve in Angarsk. Continued joint support for the Global Initiative to Combat Nuclear Terrorism. Congressional debate over the agreement in the past has focused on several key issues: the nature of Russian-Iranian cooperation, the impact of a U.S.-Russian agreement on the future of nuclear fuel cycle policies, and the impact of the agreement on bilateral relations including nuclear nonproliferation cooperation. While some view the agreement as promoting bilateral cooperation on U.S. nonproliferation goals and as a recognition of recent Russian cooperation, others believe the United States could gain leverage on negotiations with Russia on Iran and other matters by delaying approval of the agreement. Congressional consideration of the agreement ended on December 8, 2010. No joint resolutions disapproving the agreement were adopted, paving the way for entry into force. Even before the crisis in the Republic of Georgia in August 2008, approval of a U.S.-Russia 123 agreement by Congress was not certain. Legislation both supporting and opposing the agreement was introduced in the 110 th Congress: Representative Edward Markey on May 14, 2008, introduced H.J.Res. 85 expressing disfavor of the agreement. On June 24, 2008, Chairman of the Senate Foreign Relations Committee Joseph Biden and Senator Richard Lugar submitted a joint resolution of approval, S.J.Res. 42 . It was discharged from committee but indefinitely postponed by unanimous consent in September 2008. Chairman of the House Committee on Foreign Affairs Howard Berman and Ranking Member Ileana Ros-Lehtinen introduced a resolution of disapproval, H.J.Res. 95 , on June 24, 2008. The House Committee on Foreign Affairs reported H.R. 6574 on July 23, 2008. This bill would have approved the U.S.-Russia 123 agreement, notwithstanding the AEA, with certain conditions. Under this resolution, no license could be issued for the export of nuclear material, equipment, or technology to Russia unless the President certified to Congress that Russia (1) is not transferring sensitive nuclear, biological- or chemical-weapons-related, ballistic or cruise missile technologies, goods, or services to Iran; (2) is cooperating with the United States on international sanctions on Iran; and (3) had ratified appropriate nuclear liability conventions or enacted domestic laws to protect U.S. firms. In response to Russian actions in August over the conflict in Georgia, some members of Congress called on the Bush Administration to withdraw the agreement from congressional consideration. There was no precedent for the President withdrawing a 123 from congressional consideration, and the Atomic Energy Act does not specify procedures for doing so. On September 8, 2008, the Secretary of State issued a statement saying that the President would notify Congress that "he has today rescinded his prior determination" regarding the agreement and therefore there is no basis for Congress to consider it. Secretary Rice states that "the U.S. nonproliferation goals contained in the proposed Agreement remain valid: to provide a sound basis for U.S.-Russian civil nuclear cooperation, create commercial opportunities, and enhance cooperation with Russia on important global nonproliferation issues." She expresses regret for the decision but says that "unfortunately, given the current environment, the time is not right for this agreement." In his message to Congress, President Bush wrote that this decision is "in view of recent actions by the Government of the Russian Federation incompatible with peaceful relations with its sovereign and democratic neighbor Georgia." In the original determination of May 5, 2008 (Presidential Determination 2008-19), the President determined that the agreement will promote and will not pose an unreasonable risk "to the common defense and security." The President's message of September 8 says this determination "is no longer effective." It also says that "if circumstances should permit future reconsideration of the proposed Agreement, a new determination will be made and the proposed Agreement will be submitted for congressional review pursuant to section 123 of the Act." Additional legislation proposed in the 110 th Congress focused on Iran's nuclear programs and also sought to condition nuclear cooperation with Russia. The Iran Counter-Proliferation Act of 2007 ( H.R. 1400 ), passed by the House, would prohibit any "agreement for cooperation between the United States and the government of any country that is assisting the nuclear program of Iran or transferring advanced conventional weapons or missiles to Iran." Similarly, S. 970 specifically would have prohibited a 123 agreement with Russia until "Russia has suspended all nuclear assistance to Iran and all transfers of advanced conventional weapons and missiles to Iran" or "Iran has completely, verifiably, and irreversibly dismantled all nuclear enrichment-related and reprocessing-related programs." The Iran Sanctions Act of 2008 ( S. 3227 ) included a prohibition on entering into a nuclear cooperation agreement with Russia or granting licenses for the direct or indirect export or the direct or indirect transfer of nuclear-related goods, services, or technologies to Russia until certain presidential certifications are made. S. 3227 was reported out of the Senate Finance Committee on July 7, 2008, but was not passed by the full Senate. The Security through Termination of Proliferation Act of 2008 ( H.R. 6178 , introduced on June 4, 2008) included similar provisions, including that a nuclear cooperation agreement with a country proliferating to Iran, North Korea, or Syria may not enter into force. These bills, as well as letters sent to the President from members of Congress after submittal of the 123 agreement to the Congress, showed a linkage between Russia's policies toward Iran and support for a bilateral civilian nuclear accord in Congress. In 2008, some members of Congress raised concerns about the information contained in the Nuclear Proliferation Assessment Statement (NPAS). The NPAS is described in section 123.a. (42 U.S.C. 2153(a)) and is a required part of a 123 agreement package for Congress. An unclassified NPAS is submitted along with the proposed text of the agreement, and a classified annex is submitted separately. The NPAS is to be prepared by the State Department in consultation with the Director of National Intelligence. Its purpose is to explain how the agreement meets the AEA nonproliferation requirements. The unclassified NPAS usually includes an overview of the country's nuclear energy program and related infrastructure, nuclear weapons program (if relevant), nonproliferation policies, and relations with third countries of concern in the nuclear arena. Some members of Congress were concerned that the 2008 NPAS for the US-Russia 123 agreement excluded information regarding nuclear trade between Russia and Iran. This prompted then-Chairman of the House Energy and Commerce Committee John Dingell and Subcommittee on Oversight and Investigations Chairman Bart Stupak to request that the Government Accountability Office (GAO) evaluate the inter-agency process for development of U.S.-Russia NPAS, whether the NPAS conclusions were supported, and whether any information was omitted that might change these conclusions. The GAO also lists Chairman Henry Waxman and Representative Edward Markey as report requesters. The GAO issued its report in July 2009. The findings were related primarily to the inter-agency review process and recommended that the State Department should clarify interagency roles, allow adequate time for review by the intelligence community and the Nuclear Regulatory Commission, and establish written procedures for development and review of 123 agreements and associated documents. Upon the Obama Administration's transmittal of the agreement to Congress in 2010, Chairman of the House Foreign Affairs Committee Howard Berman said that the top nonproliferation policy priority should be preventing Iran from obtaining nuclear weapons and that "at the appropriate time, we will examine the agreement more fully." Three joint resolutions were introduced in the House, and referred to the House Foreign Affairs Committee, two expressing disfavor and one providing for approval of the agreement: On May 21, 2010, Representative Edward Markey and co-sponsor Representative Jeff Fortenberry introduced a joint resolution ( H.J.Res. 85 ) expressing disfavor of the proposed agreement. On June 21, 2010, House Foreign Affairs Committee Chairman Howard Berman and co-sponsor Representative Dana Rohrabacher introduced a joint resolution that provides for approval of the proposed agreement ( H.J.Res. 91 ). On June 21, 2010, House Foreign Affairs Committee Ranking Member Ileana Ros-Lehtinen, with Representatives Dan Burton and Edward Royce, introduced a joint resolution that provides for disapproval of the proposed agreement ( H.J.Res. 92 ). Senate Foreign Relations Committee Chairman John Kerry and Ranking Member Richard Lugar introduced a joint resolution ( S.J.Res. 34 ) that would approve the proposed agreement on June 21, 2010. It was referred to the Senate Foreign Relations Committee. As stated above, no positive action by Congress is required for the agreement to enter into force after the congressional review period expires. The Comprehensive Iran Sanctions, Accountability, and Divestment Act (CISADA) of 2010 was signed by the President on July 1, 2010 ( P.L. 111-195 ). Section 3 (9) of the bill says that it is the sense of Congress that no export licenses should be given under a civilian nuclear cooperation (123) agreement if the recipient country "is providing similar nuclear material, facilities, components, or other goods, services, or technology to another country that is not in full compliance with its obligations under the Nuclear Non-Proliferation Treaty, including its obligations under the safeguards agreement between that country and the International Atomic Energy Agency," unless the President determines that such transfers would not undermine U.S. nonproliferation objectives. Section 102, subsection a, of the bill prohibits the issuance of export licenses under a 123 agreement for "any country whose nationals have engaged in activities with Iran relating to the acquisition or development of nuclear weapons or related technology, or of missiles or other advanced conventional weapons that have been designed or modified to deliver a nuclear weapon." The President can waive the provision by making a determination and notification to the appropriate congressional committees that the country did not know or have reason to know about the activity, or if the country is taking "all reasonable steps" to prevent recurrence and penalize the person involved. An earlier House report ( H.Rept. 111-342 ) states that "the Committee believes that a country that is, as a matter of policy or through willful inaction, allowing its citizens or companies to provide equipment, technology or materials to Iran that make a material contribution to its nuclear capabilities should not at the same time benefit from nuclear cooperation with the United States." The United States and Russia cooperate on a variety of nuclear nonproliferation and nuclear energy initiatives, under ad hoc agreements. While this cooperation is focused primarily on nuclear nonproliferation measures, in recent years the United States and Russia have explored ways to develop civilian nuclear energy cooperation. Presidents Bush and Putin in July 2006 established a working group whose report defined an Action Plan for cooperation that led to the bilateral Presidential Declaration on Nuclear Energy and Nonproliferation of July 3, 2007. In an effort to continue this process and as part of the Obama Administration's "reset" of relations with Russia, in July 2009 Presidents Obama and Medvedev established a Bilateral Presidential Commission that included a Working Group on Nuclear Energy and Security chaired by Sergei V. Kiriyenko, Head of Rosatom, and Daniel Poneman, Deputy Secretary of Energy. The July 2009 Joint Statement reaffirmed their intention to bring a bilateral nuclear cooperation agreement into force and said that the two countries would focus on: development of prospective and innovative nuclear energy systems; research into methods and mechanisms for the provision of reliable nuclear fuel cycle services; research into international approaches for the establishment of nuclear fuel cycle services to secure the nuclear weapons nonproliferation regime; and improvement of the international safeguards system. The working group agreed on an Action Plan for nuclear security and civil nuclear energy cooperation in September 2009. A commission report said that the working group identified research and development areas for collaboration and is working on a "new fuel services framework." An argument in favor of the agreement is that the United States could gain from Russian advanced fuel cycle research and development experience. Because the United States does not operate fast neutron reactors or reprocess, testing of fuels could be done in Russia, including post-irradiation examination. Supporters argue that U.S. partnership in developing these technologies could help ensure that proliferation resistance remains a priority. On the other hand, critics point out that the agreement risks entrenching a policy of accepting reprocessing as a necessary part of the future of nuclear energy and that this would raise proliferation risks. The proposed agreement could provide Russia with access to U.S. nuclear technologies and markets, and would open the possibility of receiving U.S.-origin nuclear materials into Russia for storage or processing. Some argue that the agreement might be construed as a U.S. stamp of approval for Russia's civilian nuclear industry when safety and environmental problems with the Russian nuclear industry remain. Others counter that only through such an agreement will U.S. safety technology and standards be available to Russia. Russia could potentially expand its reach into new nuclear power markets by adding U.S. safety and automated control systems to its exported reactors, or partnering with U.S. multinationals. Russia could also potentially improve the operational efficiency of its own reactors with U.S. technology. The United States and Russia both promote a future global nuclear energy framework that addresses emerging nuclear energy states' fuel needs while dissuading them from pursuing indigenous enrichment and reprocessing technologies. This includes a "cradle to grave" approach to nuclear fuel. As part of this effort, recent Russian nuclear power plant exports, such as with Turkey, are a "package deal" that would include construction, operation, fuel services, and spent fuel return. Broader proposals to discourage new states from building fuel cycle facilities include the development of multilateral fuel assurances and international fuel service centers. For this purpose, Russia has set up the joint venture International Uranium Enrichment Center at Angarsk, which is under international safeguards. An international LEU fuel reserve will also be hosted at the site. Proponents of the agreement say that collaboration between the United States and Russia on providing nuclear fuel cycle services to nonnuclear weapon states could increase the confidence of customer states and therefore increase participation. Experts and policy makers have also been exploring what role Russia could play in addressing the issue of nuclear waste and spent fuel disposition. Some have proposed that a 123 agreement with Russia could open the possibility of reprocessing U.S.-origin spent fuel from third countries (although Russia has not yet decided to do this) or long-term spent fuel storage of such material in Russia. The enrichment of U.S.-obligated reprocessed uranium, and the re-enrichment of U.S. uranium tails or U.S.-origin tails, using Russian enrichment facilities, could likewise occur only if a 123 agreement was in force. Under Article 9 of the proposed agreement, conversion and enrichment to less than 20%, fabrication of LEU fuel, irradiation, blending, or down-blending to LEU would be permitted under the agreement. The parties would have to agree to reprocessing of U.S.-origin spent fuel before this occurred. For these potential areas of cooperation to be realized, however, nuclear liability coverage for U.S. companies doing business in Russia would need to be clarified. The Russian Federation has been party to the Vienna Convention on Civil Liability for Nuclear Damage since 2005. However, Rosatom Corporation enjoys sovereign immunity as a partially state-owned enterprise. Russia has not yet signed or ratified the Convention on Supplementary Compensation for Nuclear Damage (CSC). Currently, ad hoc bilateral agreements with liability coverage are in place for U.S. safety and nonproliferation assistance programs. Some U.S. companies have stated that they would need Russia to ratify the CSC or adopt domestic laws that would provide liability protection for U.S. firms before doing business in Russia. In a 2003 letter to the Bush Administration, the Contractors International Group on Nuclear Liability (CIGNL) wrote that "the various bilateral and multilateral indemnity agreements that have been concluded to date are not considered to provide adequate nuclear liability protection by most large, well-capitalized U.S. companies." As cited above, the proposed legislation reported out of the House Foreign Affairs Committee ( H.R. 6574 ) in 2008 would have approved the agreement with conditions that included the stipulation that Russia would have to ratify appropriate nuclear liability conventions or enact domestic laws to protect U.S. firms before a license under the agreement could be issued. The main focus of U.S.-Russia relations at the beginning of the Obama Administration was the negotiation of a follow-on Strategic Arms Reduction Treaty. However, Presidents Obama and Medvedev set up a process to review engagement in many sectors, as part of a "reset." The NATO-Russia Council resumed its meetings in April 2009, and in July 2009, the Russian president announced that Russia would grant supply rights to NATO forces in Afghanistan overland and in Russian airspace. Differences remain over a number of foreign policy issues, particularly Russian military bases in and diplomatic recognition of Abkhazia and South Ossetia, characteristics of future missile defense systems in Eastern Europe, the expansion of NATO and how to deal with the Iranian nuclear program. In this context, some argue that expanding cooperation with Russia on civilian nuclear energy is premature. Others argue that nonproliferation, nuclear terrorism prevention, and nuclear energy may have particular value for the bilateral relationship in this context, and that a 123 agreement could be used to influence Russian policies. U.S. Ambassador Burns remarked at the May 2008 signing ceremony that the 123 agreement marks Washington and Moscow's transition from "nuclear rivals" to "nuclear partners." Although a 123 agreement does not itself stipulate new programs or collaborative projects, it may have symbolic value and remove a longtime irritant in bilateral relations. Supporters of the agreement with Russia argued that rejecting the agreement could embolden anti-U.S. sentiment and be counter-productive to cooperation in other areas. Critics countered that its symbolic value is a reason not to enact it--it could be viewed as a reward for a Russian government that critics view as antidemocratic and repressive, and whose foreign policy often has been at odds with U.S. interests. President Bush's rescission of the national security determination as related to the proposed 123 agreement in 2008 following Russian military actions in Georgia clearly demonstrated the possibility of other foreign policy priorities overshadowing U.S.-Russian nuclear energy cooperation. During the Clinton Administration and the early Bush Administration, the United States had a policy not to conclude a civilian nuclear cooperation agreement with Russia while it was building a nuclear power reactor for Iran at Bushehr. After details about Iran's clandestine nuclear activities came to light during 2002-2006, Russia began to step up cooperation with the United States and other countries negotiating with Iran over its nuclear program. Russia has insisted on IAEA safeguards on any transfers to Iran's civilian nuclear reactor at Bushehr. The 2005 Russian-Iranian agreement on fuel supply for Bushehr requires the return of spent fuel to Russia, in order to prevent Iran from extracting plutonium from the spent fuel. Moscow also invited Tehran to participate in its newly established international uranium enrichment center at Angarsk, as an alternative to an indigenous Iranian enrichment capability--an offer that Iran has rejected. The Bush Administration supported this approach and since 2002 no longer objected to Russia's building the Bushehr nuclear power plant in Iran. The Bush and Obama Administrations viewed the Russian provision and take-back of nuclear fuel for the Bushehr reactor as demonstrating that it is possible for Iran to have access to nuclear energy without developing its own fuel cycle. Russia has generally been only reluctantly supportive of U.N. Security Council Resolutions (UNSCRs) imposing sanctions on Iran, preferring a primarily diplomatic solution to the crisis. However, President Putin signed decrees to fully implement UNSCRs 1737, 1747, and 1803 in 2008, and Russia also supported UNSCR 1835. In 2009, Russia and the United States worked closely on proposals to supply the Tehran Research Reactor with fuel. In June 2010, Russia supported a new U.N. Security Council sanctions resolution (UNSCR 1929). In general, analysts argue that Russian and American views about the nature of the Iranian nuclear program have come closer in recent years, particularly following the revelation in September 2009 of the enrichment facility being built at Qom. Continued questions about the nature and extent of Russian cooperation with Iran were an obstacle to approval of the 123 agreement by Congress. The 2006 Iran Freedom Support Act ( P.L. 109-293 ) stated the sense of Congress that no nuclear cooperation agreement should be entered into with a country that is assisting the nuclear program of Iran. As noted above, the Comprehensive Iran Sanctions, Accountability, and Divestment Act of 2009 ( H.R. 2194 ) amended the Iran Support Act to prohibit peaceful nuclear cooperation with a country if one of its citizens or companies was assisting Iran in its nuclear weapons program. Both the 2008 and 2010 NPAS state that the United States "has received assurances from Russia at the highest levels that its government would not tolerate cooperation with Iran in violation of its U.N. Security Council obligations." Some reports in 2008 said that Russian entities had transferred sensitive nuclear technology to Iran, but this activity was ended by high-level Russian governmental intervention and assurances were given to the highest levels of the U.S. government. Additional details on the proliferation concerns associated with Russian-Iranian cooperation are possibly part of the classified annex. The 2009 Director of National Intelligence report to Congress on WMD Acquisition says that "entities in Russia and China continue to sell technologies and components in the Middle East and South Asia that are dual use and could support WMD and missile programs.... Russian entities have provided assistance to missile and civil nuclear programs in Iran and India." The report also says that Russian entities have been a source of dual-use biotechnology equipment and expertise, including for Iran. Another issue of congressional interest is the planned Russian sale of five S-300 air defense systems to Iran. Russia has so far stalled on completing this transaction. It is expected to be deployed near Iranian nuclear facilities. The May 2010 draft of the U.N. Security Council sanctions resolution on Iran would not prohibit this transfer. Air defense systems are not prohibited under international export control regimes, nor would the transfer automatically fall under any current U.S. sanctions. On May 21, 2010, the State Department announced it was removing sanctions on four sanctioned entities in Russia. Since 1998, at least 19 different Russian entities have been placed under proliferation-related sanctions on over 20 different occasions. However, with the removals on May 21, there appear to be no current proliferation-related sanctions against Russian entities. Some observers have asserted that removal of sanctions was done in exchange for Russian support for a draft U.N. Security Council resolution that strengthens sanctions against Iran. The State Department spokesman has said that, regardless, there was no evidence that the companies removed from the sanctions list were currently transferring arms or technology. In March 2010, the Administration lifted sanctions on two other Russian entities, Glavkosmos and the Baltic State Technical University, both sanctioned in 1998 for helping Iran's missile and weapons programs. Additionally, the Department of Commerce lists entities subject to license requirements for proliferation-related end-use or end-user controls under Part 744 Supplement of the Export Administration Regulations (EAR). As of February 19, 2010, there were eight Russian entities on this list. Three of these entities' license applications are reviewed on a case-by-case basis, while five are under "presumption of denial." According to Commerce Department officials, this list is currently under review. Some argue that maximum leverage has already been gained in coaxing Russian behavior on Iran in exchange for the signing of a 123 agreement, and that there will be opportunities in the future to exercise further leverage if necessary, because each transaction under a 123 agreement must be approved for licensing. Supporters may also see the 123 agreement as a way to encourage Russia to continue pressing Iran on such issues as the Bushehr reactor safeguards. Some argue that engaging Russia on the scientific level would improve transparency and could provide a deterrent to Russian technical cooperation with Iran. Others were reluctant to approve the agreement when questions remain unanswered about the Russian government's control over transfers to Iran's nuclear and missile programs.

The bilateral nuclear cooperation agreement between the United States and Russia entered into force after an exchange of diplomatic notes on January 11, 2011. The United States and Russia signed a civilian nuclear cooperation agreement on May 6, 2008. President Bush submitted the agreement to Congress on May 13. The agreement was withdrawn from congressional consideration by President George W. Bush on September 8, 2008, in response to Russia's military actions in Georgia. President Obama transmitted the proposed text of the agreement to Congress on May 10, 2010, along with the required Nuclear Proliferation Assessment Statement (NPAS) and his determination that the agreement promotes U.S. national security. Under U.S. law, Congress had 30 days of continuous session for consultations with the Administration, followed by an additional 60 days of continuous session to review the agreement. Since it was not opposed by a joint resolution of disapproval or other legislation, the agreement was considered approved at the end of this time period on December 8, 2010. This report discusses key policy issues related to the agreement, including future nuclear energy cooperation with Russia, U.S.-Russian bilateral relations, nonproliferation cooperation, and Russian policies toward Iran. These issues were relevant to the debate when the agreement was being considered in the 111th and 110th Congresses. This report will be updated as events warrant.

Americans obtain health insurance coverage in different settings and through a variety of methods. Although many receive coverage through publicly funded programs (e.g., Medicare and Medicaid), private health insurance is the predominant form of health coverage in the United States. In 2014, about 66.6% of the U.S. population had private health insurance. The private market is often described as having three segments: non-group (or individual), small group, and large group. Most individuals and families obtain private insurance through small- or large-group coverage, such as employer-sponsored insurance; some individuals and families purchase private insurance on their own in the non-group market. The Patient Protection and Affordable Care Act (ACA; P.L. 111-148 , as amended) includes several provisions that affect the private health insurance market. These provisions create federal rules and incentives for entities and individuals in the market that build on and modify the existing market structure. Collectively, the provisions reflect an overall goal of the ACA--to increase access to health insurance coverage. Nearly all individuals can obtain private coverage regardless of preexisting conditions or health status, and insurers have limited ability to vary premiums based on an applicant's health status and other characteristics. To help accommodate individuals who have access to private health insurance as a result of these (and other) provisions, individuals and small businesses can shop for and purchase private coverage in health insurance exchanges (marketplaces). In addition, some individuals can receive financial assistance toward coverage obtained in an exchange. The ACA's individual mandate requires most individuals to maintain health insurance coverage or pay a penalty for noncompliance. Many have argued that unless healthy individuals are encouraged to participate in the private market, insurance pools will consist primarily of individuals who are high users of health care services, potentially creating financially unstable situations for insurers and enrollees. The ACA created three risk mitigation programs--reinsurance, risk corridors, and risk adjustment--to help health insurance issuers adjust to the reformed private health insurance landscape, particularly the new entrants to the market and the changes to how issuers set premiums. Reinsurance and risk corridors are temporary programs, providing issuers assistance from 2014 through 2016. The risk adjustment program, which also began in 2014, is permanent, designed to help issuers address the ongoing issue of adverse selection. The ACA provides financial incentives to employers to consider when determining whether to offer employer-based health insurance to employees. Some small employers are eligible to receive tax credits for their contributions toward their employees' health insurance premiums. Certain large employers are subject to a shared responsibility provision (often called the employer mandate). This provision does not explicitly mandate that a large employer offer employees health insurance; instead, it has the potential to impose penalties on large employers that do not provide affordable and adequate coverage to their employees. The ACA also includes some provisions that states may choose to implement. For example, states have the option of creating a Basic Health Program to provide state-designed assistance to lower-income individuals in lieu of those individuals obtaining coverage through an exchange. State-option provisions give states some flexibility to continue existing programs or create new programs better suited to their specific health insurance markets. This report provides an overview of many of the ACA provisions that affect the private health insurance market. More detailed information about these provisions can be found in other Congressional Research Service (CRS) reports. For a list of related reports, see the " Related CRS Reports " section below. A number of ACA provisions focus on changing how insurers and sponsors of insurance (e.g., employers) offer coverage. Collectively, these market reforms establish federal minimum requirements regarding access to coverage, premiums, benefits, cost-sharing, and consumer protections while generally giving states the authority to enforce the reforms and the ability to expand on the reforms. The market reforms do not apply uniformly to all types of private health plans. The application of some reforms varies by market segment--non-group, small group, or large group. Some reforms apply to all three market segments, but many focus specifically on the non-group and small-group insurance markets. These reforms are intended to address perceived failures in those markets, such as limited access to coverage and higher costs of coverage, and provide some parity with the large-group market, which may already have many of these features. The application of group market reforms also varies by whether the group sponsor (e.g., employer) is fully insured or self-insured. In addition, certain types of private plans are exempt from complying with some or all of the market reforms. See the text box for more details. When market reforms were implemented under the ACA, some of them were new to certain insurance markets; others had been in place in some capacity due to either state or federal laws. For example, guaranteed issue requires that an insurer accept every applicant for coverage as long as the applicant agrees to the terms and conditions of the insurance offer (e.g., the premium). In the early 1990s, some states passed laws requiring guaranteed issue in their small-group markets, with fewer states adopting types of guaranteed-issue laws in their non-group markets. In 1996, Congress passed the Health Insurance Portability and Accountability Act (HIPAA; P.L. 104-191 ), which requires guaranteed issue in the small-group market in all states. The ACA extends these efforts by requiring, as of 2014, that all non-grandfathered non-group and group plans (except those that are self-insured) offer coverage on a guaranteed-issue basis. Table 1 provides a brief overview of the market reforms in the ACA. By January 1, 2014, every state had to establish a health insurance exchange. The ACA exchanges are marketplaces in which individuals and small businesses can shop for and purchase private health insurance coverage. Exchanges are intended to simplify the experience of providing and obtaining coverage. They are not intended to supplant the private market outside of exchanges. Plans offered through an exchange must be, for the most part, qualified health plans (QHPs). In general, to be a QHP, a plan has to offer the essential health benefit (EHB) package and meet certain standards related to marketing, choice of providers, and plan networks. To facilitate the purchase of private insurance, the exchanges have two parts. One is the individual exchange , in which individuals can buy non-group insurance for themselves and their families. The other is the small business health options program (SHOP) exchange, designed to assist qualified small employers and their employees with insurance purchases. For SHOP exchange eligibility in 2016 and beyond, a small employer is one with 50 or fewer employees, but states may elect to define a small employer as one with 100 or fewer employees. In 2017, a state will have the option to allow large employers to use the SHOP exchange, regardless of how the state defines large employer. Individuals purchasing non-group coverage through an exchange may be eligible to receive financial assistance in the form of premium tax credits and cost-sharing reductions. Small employers purchasing small-group coverage through a SHOP exchange may be eligible for small business health insurance tax credits. Premium tax credits are generally available to lower-income individuals who are part of a tax-filing unit and who purchase non-group coverage through an exchange. To be eligible, individuals must have household income at or above 100% of the federal poverty level (FPL) but not more than 400% FPL. (For 2016, the corresponding income range is $11,880-$47,520 for a single individual and $24,300-$97,200 for a family of four, provided the individuals live in the 48 contiguous states.) Premium tax credit eligibility is also contingent on an individual's eligibility for other minimum essential coverage. Individuals who are eligible for minimum essential coverage are generally ineligible for premium tax credits, because the credits are directed at individuals who do not have access to coverage outside the non-group market. An exception is individuals who are eligible for employer-sponsored insurance that is not considered affordable or adequate. If an individual's offer of employer-sponsored insurance is considered unaffordable or inadequate, the individual may purchase non-group coverage through an exchange with the assistance of a premium tax credit (provided the individual is otherwise eligible for the credit). The premium tax credits are advanceable and refundable, meaning tax filers need not wait until the end of the tax year to benefit from the credit and may claim the full credit amount even if they have little or no federal income tax liability. The amount of the premium tax credit varies from person to person. The credit is based on the household income of the tax filer (and dependents), the premium for the exchange plan in which the tax filer (and dependents) is enrolled, and other factors. The amount a tax filer receives in credits must be reconciled when filing a federal tax return. Any additional credit amounts owed to the tax filer will be included in the filer's tax refund for that year, and any excess amount that was overpaid in premium credits to the tax filer will have to be repaid to the federal government as a tax payment. Some individuals are eligible to receive subsidized financial assistance for cost-sharing expenses--deductibles, coinsurance, and co-payments. In general, to qualify, individuals must be eligible for premium tax credits and enrolled in a non-group silver plan through an exchange. Cost-sharing assistance is provided in two forms, and both forms are based on income. Some individuals may receive both types of cost-sharing subsidies if they meet applicable eligibility requirements. The first form reduces annual out-of-pocket limits for individuals with income between 100 % FPL and 250% FPL. The second form, which also applies to individuals with income between 100% FPL and 250% FPL, involves reducing individuals' cost-sharing requirements to ensure that the plans in which they have enrolled cover a certain percentage of allowed health care expenses, on average. This form of cost-sharing assistance directly affects deductibles, coinsurance, and co-payments. Certain small employers may be eligible for a tax credit, which reduces the cost of premiums, making small-group coverage more affordable for small employers. The tax credit is generally available to qualifying nonprofit and for-profit employers with fewer than 25 full-time equivalent (FTE) employees with average annual wages that fall under a statutorily specified cap. To qualify for the credit, employers must cover at least 50% of the cost of each of their employees' self-only health insurance coverage. The full credit covers up to 50% of the for-profit employer's contribution and 35% of the nonprofit employer's contribution to employees' health insurance premiums. As of 2014, the credit is generally available only to an employer that obtains coverage through a SHOP exchange, and it is only available for two consecutive tax years. In other words, if a qualified employer first obtains coverage through a SHOP exchange in 2016, the credit would be available to the employer only in 2016 and 2017. Since January 1, 2014, the ACA has required that most individuals maintain health insurance coverage or pay a penalty for noncompliance. To comply with the individual mandate, individuals need to obtain minimum essential coverage , which includes most types of private (e.g., employer-sponsored insurance and non-group coverage) and public coverage (e.g., Medicare and Medicaid). Certain individuals are exempt from the individual mandate or its associated penalty. The exemptions as outlined in statute and regulations include religious conscience, membership in a health care sharing ministry, and membership in an Indian tribe. Individuals who are incarcerated, cannot afford coverage, and not lawfully present in the United States may also be exempt. Those individuals who do not comply with and are not exempt from the mandate may be required to pay a penalty for each month of noncompliance. The penalty is calculated as the greater of either a percentage of applicable income , defined as the amount by which a taxpayer's household income exceeds the applicable tax filing threshold for the tax year; or a flat dollar amount assessed on each taxpayer and any dependents. As of 2016, the annual penalty is the greater of 2.5% of applicable income or $695 (the $695 will be adjusted for inflation in subsequent years). Taxpayers are required to include any payable penalty for themselves and their dependents in their federal income tax return for the taxable year. Taxpayers who fail to pay the penalty will be notified by the Internal Revenue Service (IRS). The IRS can attempt to collect any unpaid funds by reducing the amount of a taxpayer's refund for that year or future years. However, individuals who fail to pay the penalty will not be subject to any criminal prosecution or additional penalty for such failure. The Secretary of the Treasury cannot file a lien against or a levy on any taxpayer's property for failing to pay the penalty. The individual mandate is often described as working in conjunction with certain ACA market reforms, including guaranteed issue and renewability, nondiscrimination based on health status, coverage of preexisting health conditions, and rating restrictions (see Table 1 ). These reforms are intended to improve access to coverage for sick individuals or those at high risk of becoming ill. The individual mandate works in tandem with these reforms by encouraging healthy individuals to participate in the market so that insurers' risk pools are not entirely composed of individuals who are at high risk of using health care services. An insurer calculates and charges a premium in order to finance the health coverage it provides. The premium reflects several components, including the expected cost of claims for health care use during a plan year. To accurately estimate this expected cost and set appropriate premium levels, it is useful for an insurer to have information about the population it covers (i.e., to have information about the risk it is taking on). ACA provisions--particularly the market reforms and the financial assistance available through exchanges--have expanded access to the non-group and small-group markets and limited the methods insurers can use to manage risk. As a result, insurers face increased uncertainty about who will enroll in their plans and the risk levels of those enrollees. For example, individuals who were previously uninsured may apply for coverage on a guaranteed-issue basis, and insurers must accept these applicants despite having little information about their health status and pent-up demand for services. The increased uncertainty about enrollees and their risk levels makes it more difficult for insurers to accurately set premiums. The ACA establishes three risk programs to address different aspects of this uncertainty and help mitigate the financial risks associated with it. The reinsurance program and the risk corridors program are temporary programs designed to assist insurers in 2014 through 2016. The risk adjustment program is a permanent program that began in 2014. The transitional reinsurance program is a temporary program (2014-2016) designed to compensate insurers for a portion of the cost of particularly high-cost enrollees in the non-group market, both inside and outside the exchanges. Prior to the ACA, little information was available on health care usage and demand for the previously uninsured, as well as any pent-up demand due to the lack of health insurance. Accordingly, insurers would likely raise premiums to the extent possible to protect themselves against the potential high cost associated with delayed care. However, some of the new ACA market reforms limit the degree to which insurers can vary premiums. The transitional reinsurance program is designed to mitigate the financial risk associated with individuals who had delayed needed health care while they were uninsured. This temporary program assumes that any care that was delayed due to a lack of insurance would be provided in the early years of the program. All insurers and third-party administrators of group health plans (including self-insured plans) must contribute to a reinsurance program. Non-grandfathered non-group plans (offered inside and outside of exchanges) are eligible for transitional reinsurance payments to help offset the medical claims associated with high-cost enrollees. The risk corridors program is another temporary program (2014-2016) designed to mitigate the risk that insurers faced in setting premiums for QHPs in the non-group and small-group markets, both inside and outside the exchanges. Insurers were faced with many questions in regard to rate setting in this new and unfamiliar market, such as whether young, healthy individuals would sign up for insurance. The insurers' assumptions about the answers to these questions can have an impact on the premiums they set. But if the insurers' assumptions are wrong, they may end up underestimating or overestimating the premiums necessary to pay for their enrollees' claims. Under the program, payments between an insurer and the Department of Health and Human Services (HHS) are adjusted according to a formula based on each insurer's actual, allowed expenses in relation to a target amount. HHS is to make payments to an insurer that experiences losses greater than 3% of the insurer's projections, whereas an insurer whose gains are greater than 3% of its projections is to remit payments to HHS. The risk corridors program assumes that insurers will be better able to estimate premiums under the new market reforms after three years. The risk adjustment program is a permanent program (which began in 2014) intended to mitigate the effects of adverse selection in the non-group and small-group markets, both inside and outside the exchanges. Adverse selection is a function of the asymmetry of information between insurers and individuals. Individuals know more about their relative need for coverage than insurers. Individuals who expect or plan for high use of health services tend to seek out coverage and enroll in more generous (and consequently more expensive) plans, whereas individuals who do not expect to use many or any health services may not obtain coverage and, if they do, they tend to enroll in less generous (and less expensive) plans. The relative generosity of the insurance plan will thus attract higher- or lower-spending enrollees. Risk adjustment more accurately compensates insurers for the higher cost of sicker enrollees who tend to enroll in more generous plans, and it more accurately compensates insurers for the lower cost of healthier enrollees who tend to enroll in less-generous plans. Under the risk adjustment program, the relative risk for each enrollee is based on demographic and health history information. Those individual risk scores are used to calculate an adjusted average risk score for each insurer's book of business (i.e., non-group and small-group markets). These adjusted average scores are compared with a market average, and the HHS Secretary calculates transfer payments between insurers based on the relative risks of their enrollment as compared with the market average. All non-grandfathered non-group and small-group market plans (offered inside and outside the exchanges) are subject to risk adjustment. Because adverse selection is a phenomenon that is always present, risk adjustment is a permanent risk mitigation program. Certain employers are subject to a shared responsibility provision (often called the employer mandate). This provision does not explicitly mandate that an employer offer employees health insurance; instead, it has the potential to impose penalties on employers that do not provide affordable and adequate coverage to full-time employees (and those employees' dependents). The provision applies to large employers--those with 50 or more FTE employees. A large employer is subject to a penalty only if one of its full-time employees obtains coverage through an exchange and receives a premium tax credit. If a large employer offers its full-time employees coverage that is considered affordable and adequate, the employer may not be subject to a penalty because its employees are not eligible to receive premium tax credits. However, if a large employer does not offer coverage or if the coverage offered does not comply with the affordability or adequacy requirements, then the employer may be subject to a penalty because its full-time employees may be eligible to receive premium tax credits. No employer may be subject to a penalty based upon health coverage for any part-time employee, even if the part-time employee receives a premium tax credit. Calculation of the penalty amount depends on whether the employer offers coverage and the total number of full-time employees working for the employer. The Consumer Operated and Oriented Plan (CO-OP) program is intended to foster nonprofit, member-run health insurance issuers. The program was included in the ACA to increase the competitiveness of state health insurance markets and improve choice in the markets. The HHS Secretary must use funds appropriated to the CO-OP program to finance low-interest start-up and solvency loans for organizations applying to become qualified nonprofit issuers of health plans. Awarded entities (referred to as CO-OPs) are to use the start-up loans for assistance with costs associated with creating the CO-OP, and the solvency loans must be used to help the entity meet state solvency requirements. All loans must be repaid with interest; the start-up loans must be repaid within 5 years and the solvency loans must be repaid within 15 years (from the date of disbursement). The ACA appropriated $6 billion of federal funds for the CO-OP program. Subsequent legislation rescinded $2.6 billion from the program, leaving it with $3.4 billion. The American Taxpayer Relief Act of 2012 ( P.L. 112-240 ) rescinded all but 10% of the CO-OP funds that were unobligated at the end of 2012. The remaining funds were to be used to support the entities that had already received CO-OP loans. The Centers for Medicare & Medicaid Services (CMS) awarded loans to 24 CO-OPs. One of the 24 was dropped from the program prior to offering health plans. Among the remaining 23 CO-OPs, 11 are offering health plans in 2016. The other 12 offered health plans at one time but are not currently offering health plans and are in various stages of shutting down. CMS awarded about $2.4 billion to the 23 CO-OPs that ever offered health plans. To increase the number of plan choices offered through the exchanges, the Office of Personnel Management (OPM) must contract with private health insurance issuers in each state to offer at least two health plans through exchanges in every state. The health plans are known as multi-state plans (MSPs). OPM administers the MSP contracts similar to how it administers the Federal Employee Health Benefits (FEHB) Program. OPM negotiates plan benefits, monitors performance, and oversees compliance with ACA provisions. In general, MSPs must comply with the same requirements as QHPs offered through exchanges, and MSP issuers must be licensed in each state and comply with state laws. Individuals who enroll in MSPs have the same access to financial assistance (e.g., premium tax credits) as individuals who enroll in other QHPs offered through the exchanges. States may choose to implement certain ACA provisions. The flexibility inherent in these state-option provisions allows states to continue existing programs or create new programs that may be better suited to their specific health insurance markets. Since 2015, states may opt to offer coverage to certain low-income individuals through a basic health program (BHP). A BHP is a health insurance program for individuals under the age of 65 with household incomes between 133% FPL and 200% FPL who are not eligible for Medicaid or otherwise eligible to enroll in other minimum essential coverage and available to individuals. A BHP is offered in lieu of these individuals obtaining coverage through an exchange; however, coverage must be at least as comprehensive and affordable as what the individuals could have obtained through an exchange. A state that chooses to establish a BHP can receive funds from the federal government to operate the program. A state may apply for the waiver of any or all of the provisions listed below for plan years beginning on or after January 1, 2017. Part I of S ubtitle D of the ACA : Requirements related to the establishment of QHPs. Part II of S ubtitle D of the ACA : Requirements related to the establishment of health insurance exchanges. Section 1402 of the ACA : Provision of cost-sharing subsidies to eligible individuals who purchase non-group health insurance through a health insurance exchange. Section 36B of the Internal Revenue Code (IRC) : Provision of premium tax credits to eligible individuals who purchase non-group health insurance through an exchange. Section 4980H of the IRC: Employer mandate for large employers. Section 5000A of the IRC: Individual mandate. Waiving some or all of the allowed provisions could result in the residents of the state not receiving the "premium tax credits, cost-sharing reductions, or small business credits under sections 36B of the Internal Revenue Code of 1986 or under part I of subtitle E [of ACA] ... for which they would otherwise be eligible." If this occurs, the state is to receive the aggregate amount of subsidies that would have been available to the state's residents had the state not received a state innovation waiver. The state must use the funds for purposes of implementing the plan or program established under the waiver. A state must submit its application for a state innovation waiver to the HHS Secretary, who must share the responsibility of reviewing the application with the Treasury Secretary, as appropriate. Either Secretary may grant a request for a state innovation waiver if it is determined by the relevant Secretary that the state's plan or program meets the following criteria: Provides coverage that is at least as comprehensive as the EHB, as certified by the Office of the Actuary of CMS; Provides coverage and cost-sharing protections that are at least as affordable as the provisions of Title I of the ACA; Provides coverage to at least a comparable number of the state's residents as the provisions of Title I of the ACA would provide; and Does not increase the federal deficit. Two or more states may create a health care choice compact. The compact would allow the states to enter into an agreement whereby one or more QHPs could be offered in the non-group market in all states in the compact. In this arrangement, a QHP would only be subject to the laws and regulations of the state in which the plan was issued; however, the issuer of such QHP would be subject to other rules and requirements (e.g., market conduct rules, consumer protection rules) imposed by the state(s) in which the consumer resides. The issuer would be required either to be licensed in each state in the compact or to submit to each state's standards for offering insurance, and the issuer would have to notify all consumers that its QHPs may not comply with their state's rules. A state must have a law that specifically authorizes it to enter into a compact. The HHS Secretary may approve a compact if the agreement meets certain requirements. The ACA directed the HHS Secretary to promulgate regulations on this provision no later than July 31, 2013; as of the publication date of this report, the regulations have not been promulgated. Approved compacts could not go into effect before January 1, 2016. CRS Report RL32237, Health Insurance: A Primer CRS Report R42069, Private Health Insurance Market Reforms in the Patient Protection and Affordable Care Act (ACA) CRS Report R44163, The Patient Protection and Affordable Care Act's Essential Health Benefits (EHB) CRS Report R42735, Medical Loss Ratio Requirements Under the Patient Protection and Affordable Care Act (ACA): Issues for Congress CRS Report R44065, Overview of Health Insurance Exchanges CRS Report R44425, Eligibility and Determination of Health Insurance Premium Tax Credits and Cost-Sharing Subsidies: In Brief CRS Report R41331, Individual Mandate Under the ACA CRS Report R43981, The Affordable Care Act's (ACA) Employer Shared Responsibility Determination and the Potential ACA Employer Penalty CRS Report R44414, Consumer Operated and Oriented Plan (CO-OP) Program: Frequently Asked Questions

Private health insurance is the predominant form of health insurance coverage in the United States, covering about two-thirds of Americans in 2014. The Patient Protection and Affordable Care Act (ACA; P.L. 111-148, as amended) builds on and modifies existing sources of private health insurance coverage--the non-group (individual), small-group, and large-group markets. The ACA provisions follow a federalist model in which they establish federal minimum requirements and give states the authority to enforce and expand those federal standards. The ACA includes provisions that restructure the private health insurance market by implementing market reforms that impose requirements on insurers and sponsors of health insurance (e.g., employers); creating health insurance exchanges (marketplaces) in which individuals and small businesses can shop for and purchase private health plans that meet or exceed federal standards; providing financial assistance to qualified individuals and small employers who purchase health plans through an exchange; establishing an individual mandate, which requires most individuals to either maintain health insurance coverage or pay a penalty; creating three risk mitigation programs to help health insurance issuers adjust to the reformed private health insurance landscape; assessing penalties on certain employers that either do not provide health insurance or provide health insurance that does not meet certain criteria; and including some state-option provisions, which states may choose to implement. This report provides a broad overview of some of the private health insurance provisions in the ACA and directs readers to more in-depth CRS reports.

In the United States, and elsewhere, a growing number of organizations and individuals who are not subject to mandatory emission caps are buying or selling carbon offsets. These exchanges are voluntary because there is no requirement for these parties to curtail their greenhouse gas (GHG) emissions. The motivation for exchanges can vary. Some businesses or organizations may be seeking to enhance their public image. For example, buyers may be interested in offsetting some or all of their GHG emissions from various activities, reducing their "carbon footprint," or becoming "carbon neutral." Buyers might also be preparing for future mandatory federal GHG emission reductions, getting into the market while prices are relatively low with the expectation that today's carbon offsets will be usable to achieve future federal emission ceilings or caps. Sellers are interested in receiving income for various activities, which, without the voluntary market, would likely not occur. The concept of purchasing carbon offsets has spurred both interest and debate in recent years. This report provides an overview of carbon offsets and examines some of the issues that are generating debate (and controversy). Although there is some overlap of issues between voluntary carbon offsets and the offsets used to comply with mandatory reduction regimes, this report focuses on the voluntary offsets market. Unless otherwise stated, the carbon offsets in this report refer to those exchanged in the voluntary market. A carbon offset is a measurable avoidance, reduction, or sequestration of carbon dioxide (CO 2 ) or other greenhouse gas (GHG) emissions. Offsets generally fall within the following four categories (discussed in greater detail later in the report): biological sequestration, renewable energy, energy efficiency, and reduction of non-CO 2 emissions. Carbon offsets are sometimes described as project-based because they typically involve specific projects or activities that reduce, avoid, or sequester emissions. Because offset projects can involve different GHGs, they are quantified and described with a standard form of measure: either metric tons of carbon-equivalents (mtC-e) or metric tons of CO 2 -equivalents (mtCO 2 -e). To be considered a credible offset, the emissions reduced, avoided, or sequestered need to be additional to business-as-usual: that is, what would have happened anyway. In the context of a mandatory GHG emission reduction regime, an offset can come only from sources not covered by the reduction program (i.e., outside the emissions cap). Emission reductions from regulated sources would be required under the cap, and thus would not be additional . By comparison, a reduction activity may be additional if it occurs from a source in a nation that does not limit the source's GHG emissions. As more nations (or U.S. states) establish mandatory caps or similar standards on emission sources, the universe of potential carbon offsets will shrink. A primary concern regarding voluntary carbon offsets is their integrity. It is generally agreed that a credible offset should equate to an emission reduction from a direct emission source, such as a smokestack or exhaust pipe. Several criteria determine the integrity or quality of an offset project. This is generally considered to be the most significant factor that determines the integrity of the carbon offset. Additionality refers to whether the offset project (e.g., wind farm) would have gone forward on its own merits (or own financial benefits) without the support of the offset market. In other words, would the project have happened anyway? If the project would have occurred without the financial support of the offset buyer, the emission reductions generated from the project would not be additional. The additionality criterion is at the crux of an offset's integrity, but additionality can be difficult to assess in practice. The standards used to analyze a project's additionality vary, and some groups may downplay the importance of this attribute. An offset seller who employs a more stringent additionality analysis will likely offer "higher quality" offsets. It is generally much simpler to measure and quantify an emission reduction from a direct source than from an offset project. Two issues concerning measurement are further discussed below. To determine the amount of emissions avoided by an offset project, project managers must establish an emissions baseline: an estimate of the "business-as-usual" scenario or the emissions that would have occurred without the project. If project managers inaccurately estimate the baseline, the offsets sold may not match the actual reductions achieved. For example, an overestimated baseline (projecting more emissions than would have been emitted in the project's absence) would generate an artificially high amount of offsets. Baseline measurement may present technical challenges. In addition, project developers would have a financial incentive to err on the high side of the baseline determination, because the higher the projected baseline, the more offsets generated. A carbon offset is meaningful if it is only counted once. To be credible, when an offset is sold, it should be retired and not sold again or counted in other contexts. However, opportunities for double-counting exist. For example, a U.S. buyer may purchase offsets generated through the development of a wind farm in a country, state, or locality that has established GHG emissions targets. The U.S. buyer will count the offsets, which may have been purchased to counter an increase in personal air travel. In addition, the nation (state or locality), in which the wind farm is located, may see an emissions reduction due to the wind farm. This decrease will be reflected in the nation's GHG emissions inventory. Thus, the offset project (wind farm) may replace other reduction activities that the nation might have taken to meet its target. A tracking system needed to avoid such double-counting does not exist. Some may argue that double-counting is less of a problem if the offset project occurs in a U.S. state (county or city) with only a voluntary target (as opposed to a nation subject the Kyoto Protocol). However, the impact would be the same if the state is eventually part of a federal emissions reduction program, and the state is allowed to take credit for the earlier reductions associated with the offset project. By taking credit for an earlier reduction, the state will need to make fewer reductions to be in compliance with the new mandatory program. When carbon offsets are generated from a project, there should be confidence that the emission offsets are permanent--that the emissions are not merely postponed. This characteristic is most pertinent to biological sequestration projects, specifically forestry activities. For example, buyers need some assurance that the land set aside for forests will not be used for a conflicting purpose (e.g., logging or urban development) in the future. Although natural events (fires or pests) are hard to control, human activity can be constrained through legal documents such as land easements. In addition, an offset could come with a guarantee that it would be replaced if the initial reduction is temporary. In the voluntary market, carbon offsets can be generated from multiple economic sectors. This report discusses carbon offsets grouped into the four categories identified above. Each category contains a list of possible carbon offset examples. Specific integrity issues may be associated with particular offset categories. These issues are discussed below. The potential problems highlighted below should not necessarily rule out entire carbon offset categories. If offset project developers can address these potential obstacles, the offsets may be credible. However, it may be difficult for offset buyers to know if these problems were addressed (as discussed later in the report). Trees, plants, and soils sequester carbon, thereby reducing its amount in the earth's atmosphere. Biological sequestration projects generally involve activities that either increase sequestration or preserve an area's existing sequestration ability that is under threat (e.g., from logging or development). This offset category includes sequestration that results from activities related to agriculture and forests, and is sometimes referred to as land use, land use change and forestry (LULUCF) projects. Examples of these projects include: Planting trees on previously non-forested land (i.e., afforestation) Planting trees on formerly forested land (i.e., reforestation) Limiting deforestation by purchasing forested property and preserving the forests with legal mechanisms (e.g., land easements) Setting aside croplands from production to avoid emissions released during crop production Promoting practices that reduce soil disruption (e.g., conservation tillage) Compared to the other offset categories, biological sequestration projects offer the most potential in terms of volume (particularly forestry projects). However, this category is arguably the most controversial, because of several integrity issues that are typically associated (or perceived to be associated) with biological sequestration projects. Some agricultural sequestration offsets may raise concerns of additionality: that is, the sequestration activity would have happened regardless of the payments received from offset buyers. For example, farmers may be able to generate offsets by conducting no-till operations on their land, but for the offsets to be credible, the impetus to adopt this practice should be driven by the financial gain from the offset market. If the no-till practice was part of normal operations before the offset market, then the offset would fail the additionality test. There is anecdotal evidence indicating that some farmers have been using the no-till technique for years, but still received compensation for the offsets. If this is the case, this would be a fairly straightforward example of a non-additional offset. Should this bar other farmers, who have not been practicing conservation measures (e.g., no-till farming), from receiving offsets for initiating such measures? Arguably the measures provide some benefit on their own (e.g., less fuel use), because some farmers have been using the techniques for years. However, the offset incentive may be a primary driver at some farms. This example demonstrates the difficulties associated with proving that a project is additional. Biological sequestration offset projects may present challenges in terms of measurement. This issue is especially relevant to forestry-related offsets. The carbon cycle in trees and soils is complex: variations across tree species, ages, and geographic locations increase the measurement challenge. In addition, other variables complicate the measurement of reductions from forestry projects. For example, a recent study in the Proceedings of the National Academy of Sciences stated: We find that global-scale deforestation has a net cooling influence on Earth's climate, because the warming carbon-cycle effects of deforestation are overwhelmed by the net cooling associated with changes in albedo and evapotranspiration. Latitude-specific deforestation experiments indicate that afforestation projects in the tropics would be clearly beneficial in mitigating global-scale warming, but would be counterproductive if implemented at high latitudes and would offer only marginal benefits in temperate regions. As mentioned earlier, biological sequestration projects often raise questions of permanence: that is, whether the activity that generates offsets will continue. Although many observers expected biological sequestration offsets to dominate the international market, this has not been observed in practice. Concern of permanence has been one of the issues that has hindered the development of biological sequestration offsets in developing nations. Renewable energy sources generate less GHG emissions (wind and solar energy produce zero emissions) than fossil fuels, particularly coal. Therefore, use of renewable energy sources would avoid emissions that would have been generated by fossil fuel combustion. These avoided emissions could be sold as carbon offsets. Historically, renewable energy sources--wind, solar, biomass--have been more expensive (per unit of energy delivered) than fossil fuels in most applications. Sales of renewable energy offsets may provide the financial support to make a renewable energy more economically competitive with fossil fuels. Potential renewable energy offset projects may include: Constructing wind farms to generate electricity Installing solar panels Retrofitting boilers to accommodate biomass fuels Some renewable energy offsets may raise concerns of additionality. Several offset sellers offer renewable energy certificates or credits (RECs) as carbon offsets. One REC represents the creation of 1 megawatt-hour of electricity from a renewable energy source. RECs generally convey the environmental attributes of renewable energy projects, and RECs may be sold to promote further use of renewable energy. However, a REC does not necessarily equate with a carbon offset. A credible offset must be additional to the status quo; RECs are not subject to the same standard. Although some offset sellers closely scrutinize the RECs they offer for sale as offsets, there is no system or standard in place to ensure that RECs are additional. Several factors, other than CO 2 emission reductions, may drive the development of a renewable energy project. Although renewable energy has historically been more expensive, higher fossil fuel prices and tax incentives have made renewable energy more competitive in recent years. Moreover, many states have enacted or are developing Renewable Portfolio Standards (RPS). An RPS requires that a certain amount or percentage of electricity is generated from renewable energy resources. Twenty-eight states have implemented or are developing some type of RPS. Although some sellers will not issue RECs that were counted towards an RPS, it is uncertain whether all sellers follow this protocol. These factors complicate the determination of additionality regarding renewable energy offsets projects, particularly offsets based only on RECs. An improvement in a system's energy efficiency will require less energy to generate the same output. Advances in energy efficiency generally require a financial investment. These capital investments may pay off in the long run, but may be unprofitable in the short-term, particularly for small businesses or in developing nations. Examples of possible energy efficiency offset projects include: Upgrading to more efficient appliances or machines Supporting construction of more energy efficient buildings Replacing incandescent light bulbs with fluorescent bulbs Energy efficiency improvements are sometimes described as a "no regrets" policy, because the improvements would likely provide net benefits (e.g., cost savings) regardless of their impact on other concerns (climate change or energy independence). Thus, the issue of additionality may be a particular concern for energy efficiency offsets. For example, in some cases, it may be difficult to discern if the improvements would have been made regardless of the offset market. Offset ownership is another potential challenge regarding some energy efficiency offsets. Energy efficiency improvements may occur at a different location than the actual reduction in emissions. For example, a business that runs its operations with purchased electricity will use less electricity if energy efficiency improvements are made, but the actual emission reductions will be seen at a power plant. This may create a double-counting situation. Although the federal government has not set a mandatory GHG emission reduction, several states and local governments have enacted limits. If the state counts the emission reductions at the electricity plant towards its goal, while the business sells the offsets, the reductions will be counted twice. There are multiple GHG emissions sources, whose emissions are not generally controlled through law or regulation. These sources--primarily, agricultural, industrial, and waste management facilities--emit non-CO 2 GHGs as by-products during normal operations. In many cases, the individual sources emit relatively small volumes of gases, but there are a large number of individual sources worldwide. In addition, these non-CO 2 gases emitted have greater global warming potentials (GWP) than carbon dioxide. Offset projects in this category could provide funding for emission control technology to capture these GHG emissions. Examples of emission capture opportunities include: Methane (CH 4 ) emissions from landfills, livestock operations, or coal mines (GWP = 25) Nitrous oxide (N 2 O) emissions from agricultural operations or specific industrial processes (GWP = 298) Hydrofluorocarbon (HFC) emissions from specific industrial processes, such as HFC-23 emissions from production of HCFC-22 (GWP of = 14,800) Sulfur Hexafluoride (SF 6 ) from specific industrial activities, such as manufacturing of semiconductors (GWP = 22,800) This offset category is relatively broad, as it can involve many different industrial activities. As such, there are offset types in this category that are generally considered high quality, and others that have generated some controversy. For example, methane capture (and destruction through flaring) from landfills or coal mines has a reputation as a high quality offset. These projects are relatively easy to measure and verify, and in many cases would not have occurred if not for the offset market. The precise size or value of the voluntary offset market is unknown, because there is currently no registry or tracking system that follows exchanges in the voluntary market. However, several organizations--the World Bank, Point Carbon, Ecosystem Marketplace --have provided estimates for recent years. Table 1 includes data from the last group. The estimates indicate that the size of the market has increased rapidly every year since 2004. The World Bank report cites forecasts of increasing growth in coming years. One projection (described as "optimistic" by the World Bank) indicates that the volume of transactions in the international voluntary market will be 400 MtCO 2 -e by 2010. To put this figure in context, U.S. GHG emissions were approximately 7,125 MtCO 2 -e in 2007. The primary components of the voluntary market are retail offsets and offsets generated through the Chicago Climate Exchange. These markets, in addition to voluntary reporting and registry programs, are discussed below. In general, the voluntary offset market refers to retail or "over-the-counter" offsets that may be purchased by anyone. Purchasing a retail offset is as simple as online shopping. More than 200 organizations--private and nonprofit entities--develop, provide, or sell retail offsets to businesses and individuals in the voluntary market. The quality of the retail offsets in the voluntary market varies considerably, largely because there are no commonly accepted standards. Some sellers offer offsets that comply with standards generally regarded as quite stringent, such as the CDM or the Gold Standard. Other sellers offer offsets that meet the seller's self-established guidelines, which may not be publicly available. These self-established protocols can vary considerably, raising questions of integrity. The Chicago Climate Exchange (CCX) was established in 2003 as a trading system for buyers and sellers of offset projects to reduce GHG emissions. Buyers (i.e., GHG emitters) make voluntary but legally binding commitments to meet GHG emission reduction targets; those who emit more than their targets comply by purchasing CCX Carbon Financial Instrument (CFI) contracts, which can be generated by qualifying carbon offset projects (from sellers). CCX has guidelines and rules for determining eligible projects and their resulting carbon offsets. However, recent studies have been critical of the quality of the offsets generated by the CCX. Numerous companies and organizations sell carbon offsets to individuals or groups in the international, voluntary carbon market. The quality of the offsets may vary considerably, largely because there are no commonly accepted standards. Some offset sellers offer offsets that comply with standards that are generally regarded as the most stringent: for example, the Clean Development Mechanism or the Gold Standard. These standards generally have a robust test for additionality, as well as more substantial monitoring and verification procedures. As such, offsets meeting these standards incur higher transaction costs, adding to the cost per ton of carbon. Some offset sellers offer offsets that meet the seller's self-established guidelines. These self-established protocols can vary considerably, raising questions of integrity. Are the protocols addressing additionality concerns? Are the offsets accounted in such a way as to avoid double-counting? Are the offset projects verified by independent third parties? Assessing the standards can be challenging for a consumer. Moreover, some company's standards are not made public, but may be considered proprietary information. Two studies examined approximately 30 companies and/or groups that sell carbon offsets on the voluntary market. The following list highlights findings from the analyses: The prices for carbon offsets range between $5 and $25 per ton of carbon. Offset prices show a correlation with offset quality. Overhead costs can vary substantially by seller. However, this factor may not be a good indicator of offset quality. The tax status of a seller (profit firm vs. nonprofit group) was not a good indicator of offset quality. Arguably, the most significant finding of the two studies is the general correlation between offset price and offset quality. This correlation is more striking, considering the range of offset prices ($5 to $25 per ton of carbon reduced). Carbon offset purchases are intended to generate emission reductions that would not have occurred otherwise. In terms of global climate change mitigation, an emission reduction, avoidance, or sequestration is beneficial regardless of where or how it occurs. For example, a ton of carbon reduced at a power plant will have the same atmospheric effect as a ton of carbon reduced, avoided, or sequestered through an offset project. The core issue for carbon offset projects is: do they actually offset emissions generated elsewhere? If the credibility of the voluntary offsets is uncertain, claims of carbon neutrality may lack merit. Evidence suggests that not all offset projects are of equal quality, because they are developed through a range of standards. Although some standards are considered stringent, others are less so. In some cases, the standards used are not even made available to the purchaser. Due to the lack of common standards, some observers have referred to the current voluntary market as the "wild west." This does not suggest that all carbon offsets are low quality, but that the consumer is forced to adopt a buyer-beware mentality when purchasing carbon offsets. This places the responsibility on consumers to judge the quality of carbon offsets. The voluntary carbon offset market raises several issues that Congress may consider. The viability--both actual and perceived--of the offset market may influence future policy decisions regarding climate change. For instance, some people are concerned that the range in the quality of voluntary market offsets may damage the overall credibility of carbon offsets. If this occurs, it may affect policy decisions concerning whether or not to include offsets as an option in a mandatory reduction program. This is an important policy question for Congress. Although some oppose the use of offsets based on supplementarity concerns (see discussion above), other argue that credible offsets would expand the compliance alternatives and likely lower the costs of a GHG emissions reduction program. The voluntary program may inform the climate change policy debate in another manner. If Congress were to enact a federal GHG emissions control program that included the use of offsets, all of the integrity concerns--for example, additionality, permanence, accounting--would need to be addressed in some fashion. The experiences gained in the voluntary market may help policymakers develop standards or a process by which the integrity of offset projects could be assessed.

Businesses and individuals are buying carbon offsets to reduce their "carbon footprint" or to categorize an activity as "carbon neutral." A carbon offset is a measurable avoidance, reduction, or sequestration of carbon dioxide (CO2) or other greenhouse gas (GHG) emissions. Offsets generally fall within the following four categories: biological sequestration, renewable energy, energy efficiency, and reduction of non-CO2 emissions. In terms of the carbon concentration in the atmosphere, an emission reduction, avoidance, or sequestration is beneficial regardless of where or how it occurs. A credible offset equates to an emission reduction from a direct emission source, such as a smokestack or exhaust pipe. The core issue for carbon offset projects is: do they actually offset emissions generated elsewhere? If the credibility of the voluntary offsets is uncertain, claims of carbon neutrality may be challenged. Evidence suggests that not all offset projects are of equal quality, because they are developed through a range of standards. In the voluntary market, there are no commonly accepted standards. Although some standards are considered stringent, others are less so. Numerous companies and organizations (domestic and international) sell carbon offsets to individuals or groups in the international, voluntary carbon market. Recent studies have found a general correlation between offset price and offset quality. Due to the lack of common standards, some observers have referred to the market as the "wild west." This does not suggest that all carbon offsets are low quality, but that the consumer must necessarily adopt a buyer-beware mentality when purchasing carbon offsets. This places the responsibility on consumers to judge the quality of carbon offsets. The viability of the voluntary offset market may influence future policy decisions regarding climate change mitigation. For example, credible offsets could play an important role, particularly in terms of cost-effectiveness, in an emissions control regime. There is some concern that the range in the quality of voluntary market offsets may damage the overall credibility of carbon offsets. If this occurs, it may affect policy decisions concerning whether or not to include offsets as an option in a mandatory reduction program.

The Federal Trade Commission Act (FTC Act) established the Federal Trade Commission (FTC or Commission) in 1914. Its creation was prompted by efforts to "bust the trusts," which were late 19 th century monopolistic corporations that frequently engaged in unethical commercial practices and stifled competition. The protection of consumers from anticompetitive, deceptive, or unfair business practices is at the core of the FTC's mission. As part of that mission, the FTC has been at the forefront of the federal government's efforts to protect sensitive consumer information from data breaches, and to regulate cybersecurity. Data breaches occur when there is a loss or theft of, or other unauthorized access to, sensitive personally identifiable information (PII) that could result in the potential compromise of the confidentiality or integrity of data. As the number of data breaches continues to soar, so too do the number of FTC investigations into lax data security. Data breaches have become almost ubiquitous in every sector of the economy. Businesses, financial and insurance services, retailers and merchants, educational institutions, government and military agencies, healthcare entities, and non-profit organizations have suffered cyber intrusions into their computer networks. Cybercriminals have targeted the payment systems of several of the nation's largest retailers in order to obtain credit and debit card information to conduct fraudulent transactions. In the last year alone, large scale hacks were disclosed by Target, Neiman Marcus, Michaels, and Home Depot. Since 2002, the FTC has investigated the data security practices of many companies, and brought enforcement actions against 50 companies that have engaged in "unfair or deceptive" practices that put consumers' personal data at unreasonable risk in violation of the FTC Act. Section 5 of the FTC Act prohibits unfair or deceptive acts or practices. The FTC's authority to regulate data security under Section 5 of FTC Act is being challenged in two pending cases. In FTC v. Wyndham Worldwide Corp. , a federal district court judge denied a motion to dismiss, thereby effectively lending support to the FTC's position that it possesses jurisdiction to regulate data security under its unfair or deceptive practices authority. In another data security case, In the Matter of LabMD , the commission rejected a motion to dismiss in an administrative enforcement action brought against a medical diagnostics laboratory. Both decisions are currently being appealed. The Wyndham district court granted the hotel chain's motion for immediate appeal of the ruling to the U.S. Court of Appeals for the Third Circuit (Third Circuit) to consider the commission's authority to bring data security cases. The FTC's administrative action against LabMD was stayed by the commission pending a congressional hearing investigating the firm, Triversa, a key player in the FTC's case. Separately, LabMD has asked the U.S. Court of Appeals for the Eleventh Circuit (Eleventh Circuit) for the third time to dismiss the administrative action. Both cases are the subject of a great deal of interest from Congress, businesses, trade groups, corporate law firms, and legal scholars. Outside of government, there has been an academic debate over the scope of the FTC's authority respecting data security. Some scholars have argued that specific legislation is needed to give the FTC express authority to take action, under well-defined regulations against companies that experience data security breaches. Other information privacy law scholars counter that the "FTC enforcement has certainly changed over the course of the past fifteen years, but the trajectory of development has followed a predictable set of patterns. These patterns are those of common law development." This report will discuss the FTC's legal authority under Section 5 of the FTC Act in relation to data security, and the two aforementioned cases. The FTC first became involved with consumer privacy issues in 1995. Initially, the FTC promoted industry self-regulation as the preferred approach to protecting consumer privacy. After assessing its effectiveness, however, the FTC reported to Congress that self-regulation was not working. Thereupon, the FTC began taking legal action against entities that violated their own privacy policies, asserting that such actions constituted "deceptive trade practices" under Section 5(a) of the FTC Act which prohibits unfair or deceptive acts or practices. The FTC acknowledged that, although it had the power under Section 5 of the FTC Act to pursue deceptive practices, such as a website's failure to abide by a stated privacy policy, the agency could not require companies to adopt privacy policies. To remedy this, the FTC proposed legislation that would provide it with the authority to issue and enforce specific privacy regulations. In 2001, a change in presidential administrations and in FTC leadership caused the agency to shift its priorities from seeking new privacy legislation to expanding enforcement of consumer protection laws in order to target companies that had inadequate data security practices. The FTC's new focus resulted in the filing of numerous investigations, based on its Section 5 unfairness authority against companies that experienced data security breaches resulting in a loss or theft of, or other unauthorized access to, sensitive personal information. In general, the FTC's most recent unfair practices complaints allege that a company's failure to maintain reasonable and appropriate data security for consumers' sensitive personal information caused, or was likely to cause, substantial injury to consumers; that consumers cannot reasonably avoid such injury; and the company's failure in this regard is not outweighed by countervailing benefits to consumers or competition. Such failures are alleged to be in violation of Section 5 of the FTC Act. In March 2012, the FTC issued a Privacy Report which articulated "best practices" for companies collecting and using data that can be reasonably linked to a consumer, computer, or device. Entities that collect only non-sensitive data from fewer than 5,000 consumers per year and that do not share the data with third parties would not have to adhere to the practices. In 2014, in tandem with the announcement of its fiftieth settlement in a data security case, the FTC issued a statement outlining, among other things, its approach to data security: The touchstone of the Commission's approach to data security is reasonableness: a company's data security measures must be reasonable and appropriate in light of the sensitivity and volume of consumer information it holds, the size and complexity of its business, and the cost of available tools to improve security and reduce vulnerabilities. Through its settlements, testimony, and public statements, the Commission has made clear that it does not require perfect security; reasonable and appropriate security is a continuous process of assessing and addressing risks; there is no one-size-fits-all data security program; and the mere fact that a breach occurred does not mean that a company has violated the law. In addition, the commission provides educational materials to industry and the public about what "reasonable" data security generally entails. The FTC's approach to reasonable data security is based on broad principles. According to the FTC, the basic principles of a reasonable data security program are that companies should (1) know what consumer information they have and what employees or third parties have access to it; (2) limit the information they collect and retain based on their legitimate business needs; (3) protect the information they maintain by assessing risks and implementing protections in certain key areas--physical security, electronic security, employee training, and oversight of service providers; (4) properly dispose of information that they no longer need; and (5) have a plan in place to respond to security incidents, should they occur. The FTC has not been delegated explicit authority to regulate data security. Rather, the FTC has broad authority under Section 5 of the Federal Trade Commission Act to prohibit "unfair or deceptive acts or practices in or affecting commerce.... " Under Section 5 of the FTC Act, an act or practice is unfair if the act or practice (1) "causes or is likely to cause substantial injury to consumers," (2) "which is not reasonably avoidable by consumers themselves," and (3) "not outweighed by countervailing benefits to consumers or to competition." Indeed, it is widely acknowledged that "[t]he Commission and the Federal courts have been applying these three "unfairness" factors for decades and, on that basis, have found a wide range of acts or practices that satisfy the applicable criteria to be "unfair," even though--like the data security practices alleged in this case--"there is nothing in Section 5 explicitly authorizing the FTC to directly regulate" such practices." Congress chose not to enumerate the types of acts or practices that would constitute unfairness. As explained in the conference report accompanying the FTC Act's passage in 1914, It is impossible to frame definitions which embrace all unfair practices. There is no limit to human inventiveness in this field. Even if all known unfair practices were specifically defined and prohibited, it would be at once necessary to begin over again. If Congress were to adopt the method of definition, it would undertake an endless task. Failure to protect consumers' personal information is considered by the FTC to be an unfair or deceptive act or practice. The FTC is generally authorized by the FTC Act to "gather and compile information concerning, and to investigate from time to time the organization, business, conduct, practices, and management of any person, partnership, or corporation engaged in or whose business affects commerce.... " The FTC conducts data security investigations on a case-by-case basis to examine whether a company has "reasonable and appropriate security measures" to protect consumers' personal information. Following an investigation, the commission may initiate an enforcement action through administrative or judicial processes if it has "reason to believe" that the law is being or has been violated. The FTC Act authorizes the FTC to seek injunctive and other equitable relief, including consumer redress, for violations. The FTC does not possess explicit authority to issue civil penalties for data security violations of the FTC Act and is limited to fining companies for violating a settlement order. Fines issued by the FTC must reflect the amount of consumer loss. If the respondent elects to settle the charges, it may sign a consent agreement (without admitting liability), consent to entry of a final order, and waive all right to judicial review. If the FTC accepts such a proposed consent agreement, it places the order on the record for public comment. If the respondent contests the charges, an Administrative Law Judge (ALJ) issues an "initial decision" recommending either entry of an order to cease and desist or dismissal of the complaint. Either party, or both, may appeal the initial decision to the full FTC. The respondent may file a petition for review of the full FTC decision with any court of appeals. If the court of appeals affirms the commission's order, it enters an order of enforcement. The losing party may seek Supreme Court review. The FTC also enforces several other statutes that impose obligations upon businesses to protect consumer data. The FTC's Safeguards Rule implements the Gramm-Leach-Bliley Act's (GLBA) data security requirements for non-bank financial institutions. The Fair Credit Reporting Act (FCRA) requires consumer reporting agencies to use reasonable procedures to ensure that the entities that disclose sensitive consumer information have a permissible purpose for receiving that information. The Children's Online Privacy Protection Act (COPPA) requires website operators and online services to maintain reasonable procedures to protect the confidentiality, security, and integrity of personal information collected from children. The FTC also oversees the EU-U.S. Safe Harbor Agreement. Since 2002, under its unfair and deceptive practices authority, the FTC has brought and settled 50 data security enforcement actions against companies for failure to adequately safeguard customers' sensitive personal information. According to recent testimony by FTC Chairwoman Edith Ramirez, using the deceptive prong of its statute, the FTC has settled more than 30 matters challenging companies' express and implied claims about the security they provide for consumers' personal data, and the FTC has also settled more than 20 cases alleging that a company's failure to reasonably safeguard consumer data was an unfair practice. Because most of the FTC's privacy and data security cases, and almost all of its COPPA and GLBA cases, were resolved with settlements or abandoned, there are few judicial decisions addressing the FTC's authority to regulate the data security practices of companies which have suffered a data breach. In 2006, The FTC brought its first data security enforcement action against the data broker ChoicePoint after ChoicePoint disclosed a data breach involving the personal information of 163,000 persons. ChoicePoint ultimately agreed to pay $10 million in civil penalties and $5 million in consumer redress to settle the FTC's charges. The FTC settlement required ChoicePoint to implement new procedures to ensure that it provides consumer reports only to legitimate businesses for lawful purposes, to maintain a comprehensive information security program, and to obtain audits by an independent third-party security professional every other year for twenty years. These measures are typical of the measures required of companies in the FTC's consent agreements to remedy failures to provide reasonable security protections. In 2014, the FTC pursued its 50 th data security enforcement action. The complaint against GMR Transcription Services--an audio file transcription service that relies on service providers and independent typists to transcribe files for their clients, which include healthcare providers. The FTC alleged that as a result of GMR's failure to implement reasonable security measures and oversee its service providers, at least 15,000 files containing sensitive personal information--including consumers' names, birth dates, and medical histories--were available to anyone on the Internet. Under the terms of the FTC'S consent order with GMR, the company and its owners are prohibited from misrepresenting the extent to which they maintain the privacy and security of consumers' personal information; must establish an information security program that will protect consumers' sensitive personal information; and must have the program evaluated every two years by a certified third party. The settlement will be in force for 20 years. Many other companies have been subjected to FTC data security enforcement actions under its Section 5 authority. Recently, the FTC announced that it is also investigating the Target data breach . FTC v. Wyndham Worldwide Corp . is widely viewed as an important case to test the authority of the FTC to respond to data breaches, and it could have far-reaching implications for the liability of companies whose computer systems suffer a data breach. After a data breach occurred involving the personal information of Wyndham Hotels and Resorts' customers in 2012, the FTC filed suit against the hotel chain and three of its subsidiaries, alleging that Wyndham's privacy policy misrepresented the security of customer information and that its failure to safeguard personal information caused substantial consumer injury. Specifically, the FTC alleged that wrongly configured software, weak passwords, and insecure computer servers led to three data breaches by at Wyndham hotels from 2008 to 2010, compromising more than 619,000 payment card accounts and transfer of customers' payment card account numbers to Russia. The FTC alleged that the computer intrusions led to more than $10.6 million in fraud losses. The agency ultimately alleged that Wyndham's security practices were "unfair and deceptive" in violation of Section 5 of the FTC Act. Rather than settle the case as other companies facing FTC complaints have done, Wyndham contested the allegations and argued, among other things, that the FTC had exceeded its statutory authority to assert an unfairness claim in the data security context. Wyndham relied on the Supreme Court's ruling in Food and Drug Administration v. Brown & Williamson Tobacco Corp. , which held that the Food and Drug Administration (FDA) could not utilize its general authorities with respect to drugs to mandate disclaimers on tobacco packaging because of the lack of explicit legal authority over tobacco products. The Brown & Williamson Court reached such a conclusion because, among other reasons, (1) the agency had disclaimed authority over tobacco products in the past; (2) the FDA's authorizing statute did not clearly indicate the agency had such authority; (3) Congress had already passed tobacco-specific legislation in the past without giving the FDA such authority; and (4) it appeared unlikely that Congress would delegate a policy decision of such economic and political magnitude to the FDA through its general authority to regulate drugs. In Wyndham, the hotel chain, relying on Brown & Williamson, argued that just as Congress did not grant the FDA through its general authority to regulate drugs the specific authority to regulate tobacco products, Congress likewise did not give the FTC the necessary authority to regulate data security through the FTC's general authority to regulate unfair or deceptive trade practices. In making this argument, Wyndham noted the FTC's lack of clear statutory authority over data security; that the FTC had previously disclaimed its authority over data security; and, that Congress has enacted narrowly tailored data security legislation in FCRA, GLBA, and COPPA without providing the FTC with any broader authority. Moreover, Wyndham argued that it was unlikely that Congress would delegate a policy decision of such economic and political magnitude as setting data security standards through so general a delegation as the FTC's unfairness authority. In addition, Wyndham cited the Obama Administration's recent release of a cybersecurity framework by the National Institute of Standards and Technology (NIST) as evidence that Congress did not provide the FTC with authority to regulate data security. The FTC, in response, made several arguments. First, the agency argued that Brown & Williamson was distinguishable because here the agency's assertion of authority would not result in any statutory inconsistencies. The agency explained that the FTC Act provided the agency with a baseline authority to act in unfairness cases where it can prove substantial harm to consumers and asserted that regulating data security was consistent with that broad authority. Second, the FTC contended that specific data security laws like FCRA or HIPPA do not displace the FTC's authority, but instead supplement the FTC's Section 5 authority; grant the FTC additional powers; and affirmatively compel the FTC to use its consumer protection authority in specified ways, unlike the FDA's earlier disclaimer of authority to regulate tobacco. The FTC also argued that it had never disclaimed its "unfairness" authority over data security. Finally, the FTC claimed that any question about the FTC's authority in the data security context was put to rest by the recent decision in the FTC's administrative action against LabMD (discussed below) . On April 7, 2014, a federal district court judge in New Jersey, in FTC v. Wyndham Worldwide Corp., denied Wyndham's motion to dismiss the case, rejecting Wyndham's position that the FTC lacked statutory authority to regulate data security. Although the judicial opinion did not address the merits of whether Wyndham's security policies were inadequate, the judge did undertake, in a 42-page opinion, an in-depth analysis of the authority of the FTC to regulate data security. The district court in Wyndham began by noting that it was not ruling on a finding of liability, but only on the validity of FTC's legal theory of liability. The district court also cautioned that it was not handing the FTC a "blank check" to go after every company that suffers a data breach. As to Wyndham's claim that the FTC's unfairness authority does not include data security, the district court distinguished Wyndham from the Brown & Williamson reasoning. The court noted that in Brown & Williamson Congress had clearly intended to exclude tobacco products from FDA enforcement, whereas the case before it the court found no such congressional intent to create a data security carve out from the FTC's unfairness authority under Section 5 of the FTC Act. In fact, the court recognized that data security was a rapidly evolving area, and that nothing in Congress's several specific data security enactments (e.g., the FCRA, GLBA, and the COPPA) contradict or are otherwise incompatible with holding that the FTC possesses authority to enforce data security as an unfair trade practice under the FTC Act. Wyndham moved for and was granted permission to appeal the district court's ruling. It is uncertain when a decision from the Third Circuit can be expected. In the Matter of LabMD involves another challenge to the authority of the FTC to regulate data security breaches as unfair trade practices under the FTC Act . As was the case in Wyndham , the FTC's authority to bring enforcement actions for data security breaches was challenged, and in this instance, the commission found that the FTC had authority to bring such enforcement actions. However, unlike in Wyndham , the administrative hearing resulted in something sought by a defendant company: an order issued by the ALJ compelling the FTC to explicitly disclose what kinds of data security measures it expected the company to take and rejecting the agency ' s argument that its existing general guidance was sufficient . In the Matter of LabMD began in 2013 when the FTC filed a complaint, through its administrative process, against a Georgia medical cancer diagnostics company, LabMD, Inc. Under the FTC Act, the FTC is authorized to initiate enforcement action s either through administrative or judicial processes. The administrative complaint against LabMD alleged that the company failed to reasonably protect the security of 10,000 consumers' personal data, including medical information; that these practices harmed consumers; and that consequently LabMD engaged in unfair practices in violation of the FTC Act. LabMD argued in a motion to dismiss that the FTC has no authority to address private companies' data security practices as unfair practices because the lab is a Health Insurance Portability and Accountability Act (HIPAA) covered entity. In January 2014, four commissioners, on behalf of the FTC, unanimously denied LabMD's motion to dismiss and concluded that the FTC Act's prohibition of unfair practices applies to a company's failure to implement reasonable and appropriate data security measures. According to the order denying LabMD's motion, the commission's authority to regulate data security practices to determine which practices are unfair was consistent with the FTC Act and its legislative history, other statutes, and extensive case law. The commission further asserted that legislative history of the FTC Act demonstrated that Congress decided to delegate broad authority to the commission to determine what practices were unfair. The commission likewise rejected LabMD's contention that Congress, by enacting more specific data security statutes, implicitly repealed the FTC's preexisting authority to enforce Section 5 of the FTC Act in the field of data security. The commission, noting that "[t] he cardinal rule is that repeals by implication are not favored," found nothing in HIPAA or any of the other cited statutes that reflected a "clear and manifest" intent of Congress to restrict the commission's authority over allegedly "unfair" data security practices. The commission also rejected LabMD's argument that the FTC's decision to proceed through adjudication without first conducting a rulemaking violates LabMD's constitutional due process rights. According to the ruling, administrative agencies must enforce the statutes that Congress has directed them to implement regardless of whether they have issued regulations addressing the specific conduct. The FTC ultimately found the three-part statutory standard governing whether an act or practice is "unfair" sufficient to provide fair notice of what conduct is prohibited. In reaching that conclusion, the commission noted that given the difficulty of drafting generally applicable regulations in this rapidly changing area, questions relating to data security practices in an online environment are particularly well-suited to case-by-case development in enforcement proceedings. After the FTC C ommissioners affirmed the agency ' s authority to sue , the case 's focus shifted to whether the FTC must disclose the data security standards it uses to determine whether a company's efforts to protect consumers' information could be considered reasonable. In the same proceeding, LabMD accused the FTC of holding the company to data security standards that do not exist officially at the federal level. In response, the FTC argued that it should not be required to disclose the standards it uses to determine whether a company's data security practices are unfair under the FTC Act because of legal privileges. In May 2014, the FTC's Chief Administrative Law Judge ruled that the FTC can be compelled to disclose the data security standards it uses to determine whether a company has reasonable security measures. The administrative law judge ultimately held that the company has the right to know what data security standards the commission uses when pursuing enforcement actions. The judge ordered the FTC to provide deposition testimony as to what data security standards, if any, have been published by the FTC which it intends to rely on at trial. The FTC's testimony will present companies with the first opportunity to obtain more specificity from the agency about the data security standards driving the FTC's data breach enforcement actions. As part of efforts to enact cyber and data security legislation , several bills before Congress include provisions that would provide the FTC with enhanced enforcement authority by, for example, explicitly authorizing the FTC to promulgate rules to implement data security standards and to assess civil penalties. In recent FTC testimony before Congress, the agency has called for federal legislation that would (1) strengthen its existing authority governing data security standards on companies and (2) require companies to provide notification to consumers where there is a data security breach. In both of those areas the FTC seeks the ability to impose civil penalties and the authority to issue administrative rules. Several bills have been introduced in the Senate in the 113 th Congress that could, in varying ways, impact the FTC's powers. S. 1193 (Senator Toomey), S. 1897 (Senator Leahy), S. 1927 (Senator Carper and Senator Blunt), S. 1976 (Senator Rockefeller), and S. 1995 (Senator Blumenthal) would expressly give the FTC the power to levy civil penalties with respect to companies that fail to comply with certain data security standards. S. 1897 would permit the FTC to impose civil penalties for violations for failing to comply with federal cybersecurity standards. S. 1976 would provide the FTC with explicit authority to promulgate "information security" regulations that could extend to certain non-profits. The bill would further allow the FTC to enforce violations of these regulations with various civil penalties. Likewise, S. 1995 would give enforcement authority to the FTC.

The Federal Trade Commission Act established the Federal Trade Commission (FTC or Commission) in 1914. The protection of consumers from anticompetitive, deceptive, or unfair business practices is at the core of the FTC's mission. As part of that mission, the FTC has been at the forefront of the federal government's efforts to protect sensitive consumer information from data breaches and regulate cybersecurity. As the number of data breaches has soared, so too have FTC investigations into lax data security practices. The FTC has not been delegated specific authority to regulate data security. Rather, the FTC has broad authority under Section 5 of the Federal Trade Commission Act (FTC Act) to prohibit unfair and deceptive acts or practices. In 1995, the FTC first became involved with consumer privacy issues. Initially, the FTC promoted industry self-regulation as the preferred approach to combatting threats to consumer privacy. After assessing its effectiveness, however, the FTC reported to Congress that self-regulation was not working. Thereupon, the FTC began taking legal action under Section 5 of the FTC Act. Section 5 of the FTC Act prohibits unfair or deceptive acts or practices. Since 2002, the FTC has pursued numerous investigations under Section 5 of the FTC Act against companies for failures to abide by stated privacy policies or engage in reasonable data security practices. It has monitored compliance with consent orders issued to companies for such failures. Using the deception prong of its statute, the FTC has settled more than 30 matters challenging companies' claims about the security they provide for consumers' personal data and more than 20 cases alleging that a company's failure to reasonably safeguard consumer data was an unfair practice. Because most of the FTC's privacy and data security cases were resolved with settlements or abandoned, there have been few judicial decisions. Against this backdrop, there are now two pending cases testing the FTC's unfairness authority under Section 5 of FTC Act as a means to respond to data breaches. These cases could have far-reaching implications for the liability of companies whose computer systems suffer a data breach. Both cases are the subject of a great deal of interest from Congress, businesses, trade groups, corporate law firms, and legal scholars. In April 2014, in FTC v. Wyndham Worldwide Corp., a federal district court denied a motion to dismiss, thereby effectively lending support to the FTC's position that it possesses jurisdiction to regulate data security practices under its authority to bring enforcement actions against unfair or deceptive practices. In another case, In the Matter of LabMD--an administrative enforcement action brought against a medical diagnostics laboratory--the commission rejected a motion to dismiss that challenged the FTC's authority to impose sanctions under the FTC Act. Both decisions are currently being appealed. Wyndham is on appeal to the Third Circuit, and LabMD has asked the Eleventh Circuit for the third time to intervene. The FTC's administrative action against LabMD was stayed this summer pending a related congressional hearing. Several cyber and data security bills before Congress include provisions that would explicitly authorize the FTC to issue rules to implement data security standards and assess civil penalties. The FTC has called for federal legislation that would strengthen its existing authority governing data security standards and require companies to provide breach notification to consumers. This report provides background on the FTC and its legal authorities in the context of data security, and discusses the two aforementioned cases.

Congress established the Federal Depository Library Program (FDLP) to provide free public access to federal government information. The program's origins date to 1813, when Congress authorized the printing and distribution of additional copies of the Journals of the House and Senate, and other documents the chambers ordered printed. Quantities were to be "sufficient to furnish one copy to each executive, one copy to each branch of every state and territorial legislature, one copy to each university and college in each state, and one copy to the Historical Society incorporated, or which shall be incorporated, in each state." At various times, the program was expanded to include federal executive branch publications. The current structure of the FDLP program was established in 1962. Access to government information is provided through a network of depository libraries across the United States. In the past half-century, information creation, distribution, retention, and preservation has expanded from a tangible, paper-based process to include digital processes managed largely through computerized information technologies. Today, government (and most other) information is typically "born digital," or originated as a digital product such as a word processing document or spreadsheet. The material may then be produced in tangible, printed form, but is with greater frequency distributed by electronic means via website or other electronic dissemination technology, and retained for archival purposes in searchable electronic databases. In many cases, born digital material that previously appeared only in paper form is available only in digital form. In other cases, digital information, including websites, blogs, datasets, and audio or video content, is not intended for tangible distribution. Some materials are available in both tangible and digital forms. The transition to digital information raises a number of issues that may be of interest to Congress. Some of the possible concerns focus on access to government information in an environment in which tangible and digital materials are available, and issues related to the security and authentication of digital materials. Other areas of possible concern include the management and digitization of tangible materials, permanent retention and preservation of digital content, and costs associated with these activities. While issues related to the emergence of digital information have implications for a number of government programs and policies, this report discusses those implications as they affect FDLP. These concerns may be addressed in their own right, or in the context of user demand for FDLP information, for which there is no uniform metric over time, or comparatively among current FDLP institutions. Acronyms or abbreviations used in this report are summarized in Table 1 . A glossary in the Appendix provides definitions for the specialized information management terms used in this report. FDLP is administered under the provisions of Chapter 19 of Title 44 of the United States Code by the Government Printing Office (GPO), under the direction of the Assistant Public Printer, Superintendent of Documents (SuDocs). Under the law, FDLP libraries receive from SuDocs tangible copies of new and revised government publications authorized for distribution to depository libraries, and are required to retain them in either printed or micro facsimile form. Depository libraries--which include state, public and private academic, municipal, and federal libraries--are required to make tangible FDLP content available for use by the general public, which GPO defines as including all people in a depository library's relevant region and congressional district. In support of that effort, depository libraries provide resources to manage collection development, cataloging, bibliographic control, adequate physical facilities, collection security and maintenance, and staffing. Neither statute nor current GPO guidance specifies how depository libraries must deploy those resources in support of FDLP. Ownership of publications provided by SuDocs to depository libraries remains with the United States government. Observers note that distributing publications to depository libraries has the effects of long-term preservation of federal government information in widely dispersed settings, and free, local access to that information. The costs of providing preservation and access are also widely distributed. Under 44 U.S.C. 1912, not more than two depository libraries may be designated as regional depository libraries (hereinafter, regional libraries) in each state and Puerto Rico. Regional libraries are required to retain tangible government publications permanently, with the exceptions of superseded publications, or unbound publications that are issued later in bound form, which may be discarded as authorized by SuDocs. There are 47 regional libraries in the FDLP. Among their duties is to provide materials to patrons directly, or through interlibrary arrangements with selective libraries within their areas of responsibility. Further discussion related to regional libraries is provided in " Regional Library Activities ," below. Selective depository libraries (hereinafter, selective), are partially defined in Title 44, and include all FDLP participants that are not regional libraries. Whereas regionals receive all FDLP tangible content provided by GPO, selectives may choose among classes of documents made available. Selective libraries that are served by a regional library may dispose of tangible government documents after retention for five years, subject to certain conditions. Those selective libraries that are not served by a regional library are required to retain government publications permanently, subject to the same limitations placed on regional libraries. There are approximately 1,150 selective libraries in the FDLP. Authorities governing FDLP are based on a paper-based information creation and distribution environment. Some tangible government publications are still distributed to depository libraries; during FY2011, GPO distributed approximately 2 million copies of 10,200 individual tangible items to depository libraries. Some tangibles may have no publicly available digital counterpart if the owner of the information does not authorize GPO to make it available. SuDocs maintains a list of titles that "contain critical information about the U.S. Government or are important reference publications for libraries and the public." As a consequence, the agency has determined that "their availability ... in paper format has been deemed essential for the purposes of the FDLP." Nevertheless, much of the content that SuDocs has provided previously in tangible formats is now available in digital formats through GPO's FDLP Electronic Collection, which provides access to government information to Internet users without cost. The Collection consists of four elements: Core legislative and regulatory products that reside permanently on GPO servers and are made available through GPO's Federal Digital System (FDSys); Other remotely accessible products managed by GPO or other institutions with which GPO has established formal agreements. Access to some of the products in this category is provided by GPO through resources outside the scope of FDSys. Access to the products of official GPO content partners is provided by those entities. GPO provides access to those materials through the Catalog of U.S. Government Publications (CGP); Remotely accessible electronic government information products that remain under the control of the originating agencies that GPO identifies, describes, and to which it provides links; and Tangible electronic government information products distributed to federal depository libraries. The emergence of a predominantly digital FDLP may call into question the capacity of GPO to manage the program given its existing statutory authorities. Whereas GPO is the central point of distribution for tangible, printed FDLP materials--an activity that it continues--its responsibilities are more diverse, and may be less explicitly specified, regarding its distribution of digital information. In some instances, GPO carries out activities to distribute digital information that are similar to its actions regarding print materials. In others, GPO provides access to digital content that it does not produce or control. SuDocs has archiving and permanent retention authorities for tangible materials, which are exercised by the distribution of materials to depository libraries. At the same time, those authorities do not envision digital creation and distribution of government publications. GPO appears to have some authority to manage digital FDLP materials and other aspects of the program, subject to congressional approval. At the same time, explicit digital distribution authorities that provide for online access to publications, including core legislative and regulatory products, do not directly address GPO's retention and preservation responsibilities for digital information. A number of efforts related to the program have been initiated by GPO and groups representing a number of libraries that participate in FDLP. These have included certain regional library activities; studies of the program by a private organization; proposals by a consortium of FDLP libraries to advance the consolidation, digitization, and cataloging of tangible collections; and a study of FDLP coordinated by GPO. Although each state may have up to two regional libraries, the FDLP currently has 47 regional libraries. Six states have two regional libraries; seven regionals serve more than one state, territory, or the District of Columbia; and three states have no designated regional library. Arrangements allowing multi-state regional libraries do not appear to be sanctioned in 44 U.S.C. Chapter 19, but according to GPO, some multi-state agreements date to the years following the passage of the 1962 FDLP program revisions. In recent years, proposals have been offered by private research groups, individual FDLP libraries, and consortia of FDLP institutions for certain regional libraries to share or assume responsibilities for selective libraries in other states. One proposal, submitted to GPO in 2007, would have created a "shared" regional between the depository libraries of the University of Kansas and the University of Nebraska. Another proposal, submitted in 2011, would have authorized the Minnesota regional to assume responsibility for selective libraries in Michigan. GPO submitted the Kansas-Nebraska regional plan to the Joint Committee on Printing (JCP), which oversees the agency. On February 27, 2008, Representative Robert A. Brady, JCP chair, denied committee approval of the plan, based on an analysis "that neither the language nor legislative history of 44 U.S.C. 1914 supports" authorizing the creation of a shared regional library. In the summer of 2011, the Library of Michigan, which then served as the regional for that state, proposed that the University of Minnesota assume responsibility to provide regional services for Michigan selectives. In a September 15, 2011, response to the Library of Michigan, GPO noted that existing FDLP authorities do not explicitly authorize multi-state regionals and that "such arrangement should be approved by the Joint Committee on Printing under the provision of 44 U.S.C. 1914." GPO stated that it would not be submitting the proposal that the University of Minnesota serve as the regional depository for Michigan selectives to JCP due to concerns about the capacity of the University of Minnesota to serve Michigan selectives, collection management procedures, and what the agency described as "the lack of equal and equitable access for government publications for the people of Michigan." In September 2010, GPO contracted with Ithaka S+R (Ithaka), a private consulting and research entity, "to develop practical and sustainable models for the FDLP that retain and support the long-standing vision, mission, and values of the Program in an environment increasingly dominated by digital technology." The resulting report, Modeling a Sustainable Future for the United States Federal Depository Library Program's Network of Libraries in the 21 st Century: Final Report of Ithaka S+R to the Government Printing Office (Ithaka Report), was delivered to GPO in May 2011. Ithaka reported that their research drew conclusions in three categories, including collections and formats, services, and the network of depository libraries. The report stated that users of government information increasingly prefer to access government documents and other collections in electronic form. At the same time, the report found that tangible collections support some types of access demand. Consequently, tangible and digital collections are expected to exist together for the foreseeable future. The report noted that since more content is available online, libraries are no longer exclusive points of access to collections, but remain a source of unique services such as search and reference assistance. The report asserted that current levels of support within the FDLP "are inadequate to effectively meet the needs of the American public," and suggested that some program growth may be possible by improving opportunities for libraries principally interested in providing government information services. The report did not specify which opportunities might be available to depository libraries. The report noted that there may be new opportunities within FDLP related to the management and preservation of digital collections, and that some opportunities might be addressed by having existing networks of libraries work in collaboration on various projects. One particular challenge cited by Ithaka is the distribution of regional libraries by state boundaries (instead of other factors like population density or collections usage), which the report argues creates strain on some regional libraries to provide services to selectives in their states or regions. Ithaka incorporated its findings into a number of research, analytic, and modeling activities, and proposed a broad direction in which GPO and depository libraries might proceed to provide access to government information. Without making specific recommendations, Ithaka focused on three broad areas in which the report asserted there was general agreement among depository libraries to support the following activities: respond to the demands of providing access to tangible materials; provide access to and preservation of digital materials; and provide government information services. In support of those efforts, Ithaka identified several themes it deemed important to sustaining FDLP, including allowing depository libraries to define their activities to match their local missions and circumstances; and embracing collaboration and coordination among depository libraries beyond the current state-centered regional and selective model. Ithaka asserted that some of the various themes it suggested might require statutory changes, new operating practices by GPO, or consideration of a better match between depository libraries' interests and capacities to participate in FDLP. In August 2011, GPO rejected the Ithaka Report, stating that "[a]fter a very comprehensive analysis by GPO, the final report prepared by Ithaka was deemed unacceptable under the terms of the contract. The models proposed by Ithaka are not practical and sustainable to meet the mission, goals, and principles of the FDLP. Nonetheless, GPO believes that the final report has some value as we move forward with the library community to develop new models and increase flexibility in the FDLP to ensure the vibrant future of the Program in the digital age." GPO did not provide a detailed, publicly available explication of its decision. At the same time, some Ithaka recommendations appear to be beyond the scope of GPO's current statutory authority to oversee FDLP, and the responsibilities of FDLP participants. On April 27, 2011, the Association of Southeastern Research Libraries (ASERL) approved an implementation plan for the management and disposition of federal depository library collections in its member libraries. The implementation plan was a step in ASERL's efforts to develop what it called a "Collaborative Federal Depository Program." In its implementation plan, the group asserted "that the best means of providing broad public access to these collections is through online access to digital and digitized copies. Management of the tangible collections should include efforts to support or participate in initiatives to create a comprehensive, authentic digital collection in the public domain." ASERL argued that its plan would complement efforts to manage the tangible collections held by depository libraries in its member institutions. The ASERL plan would make efforts to define what constitutes a comprehensive FDLP tangible collection; establish two such comprehensive collections; and establish "centers of excellence," FDLP regional libraries that would focus on cataloging, inventorying, and acquiring publications in an effort to establish a comprehensive collection of agency-specific materials. Part of the ASERL effort included the development of a documents disposition database. Under the ASERL plan, materials that depository libraries intend to withdraw from their collections would be made available for a period of 45 days prior to being withdrawn. During that period, the materials could be requested first by centers of excellence, and second by FDLP regional libraries, followed by FDLP selectives in the southeast region. At the end of the 45-day selection period, the ASERL plan called for the discarding of materials, "items not requested by another library within the southeast region, unless the items are rare or likely to be of significant interest beyond the region and therefore should be included in the national 'Needs and Offers List' maintained by the Superintendent of Documents." On November 4, 2011, SuDocs responded to ASERL, writing that the proposed disposition tool was "not in compliance with the legal Requirements & Program Regulations of the Federal Depository Library Program (FDLP)." SuDocs recommended that ASERL's disposition tool be revised to allow FDLP regionals to acquire materials from among collections of selective libraries within the state the regional serves, followed by other selectives in the state, followed by FDLP libraries outside the state. On February 12, 2012, ASERL proposed to amend its implementation plan to give priority to regional and selective libraries within states, followed by depository libraries within the southeast region. On February 13, 2012, SuDocs approved the proposed revisions and requested the opportunity to review a revised implementation plan. Further response from ASERL and a final decision by SuDocs are pending at the time of this writing. Since an October 20, 2011, public forum for the FDLP community, GPO has been developing a study of the FDLP program "to effectively assess the current needs and future direction of the FDLP for both individual libraries and states." The study will be based in part on data collected through a questionnaire sent to individual depositories to identify issues. Data generated by individual depository libraries will be incorporated into state-focused action plans incorporating the feedback of depository libraries within a state. GPO states that "[c]onsensus of opinion about the key issues facing depository libraries today and in the future is the key to moving forward with change," and notes that the current study is a component of "a larger FDLP study that will also examine primary and secondary data, laws governing the program, and possible program models." in an effort to develop a plan "for the future of the Program ... based on a shared vision with member libraries." GPO has not publicly announced when the results of the depository survey or the state action plans will be available, or when those results will be integrated into the larger study of FDLP. A number of issues regarding FDLP and policy related to the transition to digital government information that might be of interest to Congress arise as a consequence of digital creation, distribution, and preservation of government information. These issues are in some cases interrelated, and may have been addressed in part in the Ithaka Report and ASERL proposals, or may receive further consideration in GPO's studies. Some of the issues may affect FDLP, and extend beyond the program to a variety of contexts related to the management of government information in tangible and digital forms, and include Maintenance and availability of the FDLP tangible collection; Retention and preservation of born digital information; Access to FDLP resources; Authenticity and accuracy of digital material; Robustness of the FDLP Electronic Collection; and Cost of the FDLP and other government information distribution initiatives. The FDLP collection, which incorporates materials dating to 1813, is estimated to contain approximately 2.3 million items. As much as one-third of the tangible collection, including most items created prior to 1976, is not catalogued. Most depository libraries do not have a full complement of depository materials because they joined the program at various times after 1813, and are not required to acquire materials retrospectively, or retroactively in the event of collection loss. Estimates of the usage of tangible FDLP materials are not readily available. This is due in part to the highly decentralized manner in which materials are stored and accessed, differences in the ways depository libraries might track collection use, and the lack of requirements to develop and maintain utilization metrics. There are some suggestions that parts of the collection might be underutilized, due to the lack of cataloging information for much of the collection distributed prior to 1976, when GPO began creating cataloging information. Others suggest that some materials that are cataloged and available receive little use. On the other hand, it has been suggested that some tangible items that had not been used were more frequently accessed when made available online. In the absence of any systematic inquiry, it cannot be determined whether the lack of utilization is the result of minimal demand, lack of catalogue information for some materials in the FDLP collection, or inadequate communication of the collection's availability. As seen in the ASERL proposals, some depository libraries see opportunities to digitize tangible FDLP collections to ensure their preservation and to make them more available to users who are better able to access the materials online than to visit libraries. Such efforts might provide broader access to the public, assuming that technological infrastructure is in place to ensure sufficient access to the Internet. Provision of digital government information in digital form could reduce the costs of maintaining a tangible collection, or provide the opportunity to reduce the number of copies of tangible government publications held by depository libraries through consolidation of collections. On the other hand, as discussed in more detail below, there is no consensus on what constitutes a sufficient number of paper copies. Further, it is possible that the costs of ongoing maintenance and technology upgrades necessary to support digitized materials could be higher than the current costs to maintain tangible collections. See " Retention and Preservation of Born Digital Information " and " Costs of FDLP and Other Government Information Distribution Programs ," below. Any effort to digitize or reduce the number of tangible copies appears to be beyond the scope of authorities granted to SuDocs or depository libraries under current law. Nevertheless, the question of how to retain and preserve government information contained in tangible form alone, and to provide access to that information to all who wish to see it, raises a number of questions. At the outset, these questions may lead in two directions: one related to the retention and preservation of tangible materials in their original form, the second focused on efforts to transition tangibles to digital formats. Questions related to the retention and preservation of tangible materials in tangible formats arise with regard to the following: preservation of decaying tangibles; establishing how many complete, tangible copies may be necessary to ensure permanent retention of records of government activities; and access for the general public when digital materials do not meet user needs. With regard to preservation, it would be necessary to have a more fully cataloged FDLP collection to be able to determine what the preservation requirements are. On questions about the number of tangible copies to be retained permanently, there is little consensus. Some studies note the opportunities to consolidate collections to free up storage space, and potentially reduce costs, while still ensuring that library users' needs are met. Others cite a lack of data to demonstrate how many copies might be needed to meet those needs. The ASERL plan calls for the development of two complete sets for the use of libraries within the southeast region. Another proposal calls for the creation by GPO of two national retrospective collections, to be housed separately in secure facilities. One study, focusing not on government documents, but on the number of copies of scholarly journals in academic settings that must be retained in print form to ensure enduring access, ranges from as few as 6 to as many as 96 copies, depending on the manner of storage and the time period during which the materials are expected to be available. A number of questions related to the retention and preservation of digitized materials are similar to issues that arise in the consideration of born digital materials, and are discussed in more detail in " Retention and Preservation of Born Digital Information ," below. Questions specifically related to digitized tangibles arise in the following areas: The costs of digitizing tangible collections; The authenticity and ownership of digitized versions of tangible publications; The disposition of original publications that are digitized; The extent to which the costs of these efforts represent a resource savings or increase in comparison to current FDLP practices or a redistribution among FDLP participants; and Whether these efforts change the extent and nature of public access to government information. In addition to the technical and procedural aspects, any discussion of tangible materials would likely involve consideration of the costs of activities necessary to preserve them in their original manifestations, or to ensure their access through cataloging or digitization. Estimates of the cost of such efforts across the FDLP program do not appear to have been developed. Digitization has a relatively short history. As a consequence, less is known about the long-term, archival retention of digitized or born digital materials than about the retention of information in paper or other tangible forms. Differences between the production and distribution processes for tangible items and digital materials affect distribution in the short term, and may have implications for accessibility over longer terms. For example, whereas tangible items are produced and distributed through FDLP, born digital materials may be accessible through the FDLP Electronic Collection, or available only through federal executive branch agency websites, or the websites of GPO content partners. This may have implications for the systematic collection and cataloging of materials, or, as just mentioned, public access to them. Born digital materials--such as databases, websites, and publications--may also be dynamic, and their content more readily changed than tangible materials. This may raise questions about version control, or strategies for identifying and capturing different versions of materials in their entirety for evaluation for archival retention. Other areas of concern are the formats in which born digital materials are produced, the media on which they are stored, and the implications of changes in either for the accuracy or authenticity of the information preserved. The potential consequences of format obsolescence, media failure resulting in data loss, and the challenges of migrating government information to newer formats or storage solutions appear to be incompletely addressed by those who create information technology systems, government agencies that create and distribute information, information professionals who curate and preserve those materials, and users who may rely on contemporary and historical government information in digital formats. Consideration of the questions and challenges surrounding the permanent retention of digital information has occurred in the past four decades, but has yet to identify solutions that are widely accepted. The emergence of digital delivery of government information outside the FDLP program may offer increased access to government information to those who might not be able to visit depository libraries. An underlying assumption of the Ithaka Report, for example, is that FDSys is functional and available, and that most users have access. While this model appears to go beyond the current statutory framework for FDLP, the apparent reliance on the FDLP Electronic Collection raises a number of questions for FDLP participants and users of government information. Unlike tangible collections, digital government information is not physically provided to depository libraries, but is provided through the Internet by GPO and its content partners to depository libraries and directly to users with Internet access. The information itself is contained on a server and in any backup facility that may be utilized. For depository libraries, this may raise concerns related to their collection development practices. If digital access is assured, it may be possible to reduce tangible collections. On the other hand, if digital access is not robust, it may be necessary for depository libraries to support access to digital materials while maintaining tangible collections. Potential users may or may not benefit from digital delivery arrangements if their Internet access is not sufficient to access resource intensive, authenticated materials served through FDSys. Another set of concerns may focus on the availability of information that is not physically present in depository libraries. Other concerns may arise if available search resources do not yield the information a user seeks. In addition to the user and depository concerns, the emergence of the FDLP Electronic Collection as a digital repository raises question about the security and availability of government information. One of the purported benefits of the tangible-based FDLP program is that widely distributed publications would provide a safeguard against the unavailability of that information if some copies were lost or destroyed. The use of the FDLP Electronic Collection may raise the following concerns in the context of digital information: Where do FDLP Electronic Collection data reside? Are current data management protocols sufficient to ensure no loss of data availability, and assured access? Are those protocols similar in GPO, other federal agencies, and non governmental partners that provide content? What backup, and information distribution and assurance policies, are in place? Depository libraries appear largely to have borne the costs of the FDLP program since its establishment. There is no mechanism in 44 U.S.C., Chapter 19, to fund depository costs of managing materials, staff, and physical plant needs, and providing public access. In an era characterized by dwindling resources, particularly in state and local governments and public libraries, the costs of maintaining FDLP tangible collections, which, according to GPO, remain the property of the United States government, have become prohibitive to some depository libraries. The emergence of digital delivery has had cost implications for information providers. Whereas the costs of tangible support rest largely with depository libraries, the costs of providing digital materials, including storage of digital materials, Web development, maintenance, and upgrades, fall on GPO for FDSys and other entities that provide content through the FDLP Electronic Collection. Over time, the costs of digital delivery could require additional appropriations for GPO and other federal content providers, or force those agencies to revaluate service levels in a hybrid system of tangible and digital delivery. Whereas the costs of a tangible FDLP fall largely on depository libraries, GPO, in its FY2013 budget submission, notes that in "a primarily electronic FDLP, the costs of the program are increasingly related to identifying, acquiring, cataloging, linking to, authenticating, modernizing, and providing permanent public access to electronic Government information, which involves recurring costs" to GPO. These costs may continue to increase as more digital information is created, and older data, software, and hardware must be upgraded to ensure ongoing digital availability. There is no publicly available estimate of what those costs might be over time. The emergence of digital information has had notable effects on the types of information created, including databases, video, audio and Web-only materials, and the manner in which that information is distributed beyond tangible, paper copies. A clear consequence of those changes is the emergence of general agreement that the statutes governing FDLP, and last visited by Congress before the digital era of information creation, collection, and distribution, are insufficient to regulate contemporary processes carried out by government and depository institutions. A related question is whether existing authorities can support GPO and depository libraries as they address the demands of users of government information and the general public. A particularly complex question is what solutions might create a more robust FDLP that is better equipped to meet the demands of providing government information to American citizens. It appears that a number of social, political, and technical concerns must be addressed more systematically before a policy regarding the future of FDLP can be developed. In moving toward the development of a more contemporary FDLP, Congress might consider the following issues: Development of methods, materials, and technologies to ensure the long-term preservation of digitized and born digital information; A more inclusive definition of materials to be included in FDLP collections. Under current law, "government publications" are defined as "informational matter which is published as an individual document at Government expense." While seemingly broad with regard to tangible materials, the law does not take into account government publishing programs outside GPO authority. The somewhat vague language could also lead to differences by agency in the type of materials that get into FDLP collections. In addition, there is no clear link to which digital material should be included in FDLP collections; The extent to which there is a need to expand the current institutional model of FDLP beyond regional and selective libraries. Information management is a more specialized activity now than when the current version of FDLP was established. Activities that might be of benefit to the program could include curatorial services, tangible preservation or digitization, information integrity assurance (e.g., digital signatures or other authentication schemes), and the cataloging of older tangible materials. These activities could occur within current FDLP institutions or by other libraries or other entities that could provide assistance without managing collections; and The costs of the program to the federal government and depository institutions, and how long-standing funding models might affect the program in the digital era. This selected glossary provides definitions for the specialized information management terms used in this report. Sources for the terms include the Government Printing Office; General Services Administration, GSA Federal Agencies Digitization Guidelines Initiative Glossary, http://www.digitizationguidelines.gov/glossary ; Institute of Museum and Library Services and Heritage Preservation, "Collaboration in the Digital Age Glossary," http://test.imls.gov/collections/resources/Glossary.pdf ; Digital Preservation Coalition, Maggie Jones and Neil Beagrie, "Introduction: Definitions and Concepts," Preservation Management of Digital Materials: A Handbook, http://www.dpconline.org/text/intro/definitions.html ; Joan M. Reitz, ODLIS- Online Dictionary for Library and Information Science, http://www.abc-clio.com/ODLIS/searchODLIS.aspx ; and American Library Association, Association for Library Collections & Technical Services, Preservation and Reformatting Section, Definitions of Digital Preservation, http://www.ala.org/ala/alcts/newslinks/digipres/index.cfm .

Congress established the Federal Depository Library Program (FDLP) to provide free public access to federal government information. The program's origins date to 1813; the current structure of the program was established in 1962 and is overseen by the Government Printing Office (GPO). Access to government information is provided through a network of depository libraries across the United States. In the past half-century, information creation, distribution, retention, and preservation has expanded from a tangible, paper-based process to include digital processes managed largely through computerized information technologies. The transition to digital information raises a number of issues of possible interest to Congress. This report discusses those possible concerns as they affect FDLP. These issues, which are in some cases interrelated, may not only affect FDLP, but also extend beyond the program to a variety of contexts related to the management of government information in tangible and digital forms. Issues include the following: maintenance and availability of the FDLP tangible collection; retention and preservation of digital information; access to FDLP resources; authenticity and accuracy of digital material; robustness of the FDLP Electronic Collection; and the costs of FDLP and other government information distribution initiatives. The emergence of a predominantly digital FDLP may call the capacity of the statutory authorities GPO exercises into question. Whereas GPO is the central point of distribution for tangible, printed FDLP materials, its responsibilities are more diverse, and may be less explicitly specified, regarding its distribution of digital information. In some instances, GPO carries out activities to distribute digital information that are similar to its actions regarding printed materials. In other instances, GPO provides access to digital content that it does not produce or control. The agency has archiving and permanent retention authorities for tangible materials, but those authorities do not envision digital creation and distribution of government publications. Digital distribution authorities provide for online access to publications, but are silent on GPO's retention and preservation responsibilities for digital information. These concerns may be addressed in their own right, or in the context of user demand for FDLP information, for which there is no uniform metric. A number of efforts related to FDLP have been initiated by GPO and groups representing a number of libraries that participate in FDLP. These have included certain regional library activities; studies of the program by a private organization; proposals by a consortium of FDLP libraries to advance the consolidation, digitization, and cataloging of tangible collections; and a study of FDLP coordinated by GPO.

By the end of 2017, the People's Republic of China (PRC) had the world's largest number of internet users, estimated at over 750 million people. At the same time, the country has one of the most sophisticated and aggressive internet censorship and control regimes in the world. PRC officials have argued that internet controls are necessary for social stability, and are intended to "enhance people's cultural taste" and "strengthen spiritual civilization." The PRC government employs a variety of methods to control online content and expression, including website blocking and keyword filtering; regulating and monitoring internet service providers; censoring social media; and arresting "cyber dissidents" and bloggers who broach sensitive social or political issues. The government also monitors the popular mobile app WeChat. WeChat began as a secure messaging app, similar to WhatsApp, but it is now used for much more than just messaging and calling (e.g., mobile payments)--and all the data shared through the app is also shared with the Chinese government. During the 2017 Communist Party Congress, censors took steps to "restrict with one hand and disseminate with the other." Censors using a variety of tools sought to eliminate certain words and expressions from appearing on social media (e.g., attempts to protest or ridicule senior political figures), while disseminating information supportive of the government and its leaders. In its 2017 Annual Report, Reporters Without Borders (Reporters Sans Frontieres, RSF) called China the "world's biggest prison for journalists" and warned that the country "continues to improve its arsenal of measures for persecuting journalists and bloggers." China ranks 176 th out of 180 countries in RSF's 2017 World Press Freedom Index, surpassed only by Turkmenistan, Eritrea, and North Korea in restrictions on press freedom. At the end of 2017, RSF asserted that China was holding 52 journalists and bloggers in prison. This report describes the current state of internet freedom in China, U.S. government and private sector activity to support internet freedom around the world, and related issues of congressional interest. The U.S. government continues to advocate policies to promote internet freedom in China's increasingly restrictive environment and to mitigate the global impact of Chinese government censorship. The Department of State, the Broadcasting Board of Governors (BBG), and Congress have taken an active role in fighting global internet censorship. Since 2008, the Department of State has invested over $145 million in global internet freedom programs. These programs support digital safety, policy advocacy, technology, and research to help global internet users overcome barriers to accessing the internet. The State Department's Internet Freedom and Business and Human Rights Section within the Bureau of Democracy, Human Rights, and Labor leads U.S. government policy and engagement on internet freedom issues. Efforts include the following: raising concerns about internet restrictions with foreign governments; collaborating with like-minded governments to advance internet freedom, including in multilateral fora such as the United Nations Human Rights Council, the G-7, and the G-20; working with interagency partners and civil society stakeholders to advance internet freedom, including at the annual Internet Governance Forum, an international multistakeholder venue for addressing global internet governance; convening discussions on emerging and critical internet freedom challenges; and building awareness within the U.S. government by conducting training on internet freedom issues for federal officials. The State Department was also a founding member and is an ongoing participant in the Freedom Online Coalition (FOC), a group of governments collaborating to advance human rights online. Examples of FOC work include building cross-regional support for internet freedom language in key international documents and joint statements on issues of concern to help shape global norms on human rights online. The Digital Defenders Partnership is a project of the Freedom Online Coalition. The partnership, established in 2012, provides emergency support for internet users who are under threat for peacefully exercising their rights online. It awards grants around the world for a number of purposes, including establishing new internet connections when existing connections have been cut off or are being restricted; developing methods to protect bloggers and digital activists; developing tools needed to respond to emergencies; developing decentralized, mobile internet applications that can link computers as an independent network; supporting digital activists with secure hosting and distributed denial of service mitigation; and building emergency response capacity. In 2016, the BBG created the Office of Internet Freedom (OIF) to oversee the efforts of BBG-funded internet freedom projects, including the work carried out by the Open Technology Fund, a joint endeavor managed by BBG and Radio Free Asia. OIF manages and supports the research, development, deployment, and use of BBG-funded internet freedom (IF) technologies. OIF provides anticensorship technologies and services to citizens and journalists living in repressive environments. OIF also supports global education and awareness of IF matters, to enhance users' ability to safely access and share digital news and information without fear of repressive censorship or surveillance. The FY2018 budget for the OIF is included in the State Department's appropriation for satellite transmissions. The Consolidated Appropriations Act, 2018, provides that "in addition to amounts otherwise available for such purposes, up to $34,508,000 of the amount appropriated under this heading may remain available until expended for satellite transmissions and internet freedom programs, of which not less than $13,800,000 shall be for internet freedom programs." Internet freedom programs are also funded through grants by the Open Technology Fund. There has been one hearing in the 115 th Congress about Internet Freedom in China by the Congressional-Executive Commission on China (CECC). In 2000, Congress created the CECC to monitor China's compliance with international human rights standards, to encourage the development of the rule of law in the PRC, and to establish and maintain a list of victims of human rights abuses in China. On April 26, 2018, the CECC held a hearing on "digital authoritarianism and the global threat to free speech." The Commission heard from three witnesses about aspects of China's restrictions to free speech: Sarah Cook Senior Research Analyst for East Asia and Editor, China Media Bulletin, Freedom House Clive Hamilton Professor of Public Ethics, Charles Sturt University, Canberra, Australia, and author, Silent Invasion, China 's Influence in Australia Katrina Lantos Swett President, Lantos Foundation The hearing explored issues such as China's desire to control the internet, such as through the shutdown of popular social media apps that do not meet the country's standards of "core socialist values." The hearing also examined U.S. policies promoting internet freedom and firewall circumvention, and the global impact of Chinese government censorship and efforts to "export" its system and values. No legislation has been introduced in the 115 th Congress related to global internet freedom in authoritarian regimes. In response to criticism, particularly of their operations in China, a group of U.S. information and communications technology (ICT) companies, along with nongovernmental organizations, investors, and universities, formed the Global Network Initiative (GNI) in 2008. The GNI aims to promote best practices related to the conduct of U.S. companies in countries with poor internet freedom records. The GNI uses a self-regulatory approach to promote due diligence and awareness regarding human rights. For example, GNI has adopted a set of principles and supporting mechanisms to provide guidance to the ICT industry and its stakeholders on how to protect and advance freedom of expression and the right to privacy when faced with pressures from governments to take actions that infringe upon these rights. Participating companies voluntarily agree to undergo third-party assessments of their compliance with GNI principles. While some human rights groups have criticized the GNI's guidelines for being weak or too broad, GNI's supporters argue that the initiative sets realistic goals and creates real incentives for companies to uphold free expression and privacy. In May 2018, the GNI continued its participation in RightsCon, a yearly summit that explores issues affecting free expression and protection of global journalism, gender diversity and digital inclusion, encryption and cybersecurity, and other topics related to internet freedom. For many years, the development of the internet and its use in China have raised U.S. congressional concerns, including those related to human rights, trade and investment, and cybersecurity. Congressional interest in the internet in China has been tied to human rights concerns in a number of ways, including the use of the internet as a U.S. tool for promoting freedom of expression and other rights in China; the use of the internet by political dissidents in the PRC, and the political repression that such use often provokes; and the role of U.S. internet companies in both spreading freedom in China and complying with or enhancing PRC censorship and social control efforts. Congress has funded a variety of activities to support global internet freedom, including censorship circumvention technology development, internet and mobile communications security training, media and advocacy skills, and public policy. China and Iran have been the primary targets of such efforts, particularly circumvention and secure communications programs. In past years, U.S. congressional committees and commissions have held hearings on the internet and China, including the roles of U.S. internet companies in China's censorship regime, cybersecurity, free trade in internet services, and the protection of intellectual property rights. Freedom on the Net 2017 : Manipulating Social Media to Undermine Democracy Freedom House November 2017 https://freedomhouse.org/report/freedom-net/freedom-net-2017 How to Circumvent Online Censorship Electronic Frontier Foundation Updated August 10, 2017 https://ssd.eff.org/en/module/how-circumvent-online-censorship The Impact of Media Censorship: Evidence from a Field Experiment in China Yuyu Chen David Y. Yang January 4, 2018 https://stanford.edu/~dyang1/pdfs/1984bravenewworld_draft.pdf China's G reat F irewall I s R ising: How H igh W ill I t G o? The Economist January 4, 2018 https://www.economist.com/news/china/21734029-how-high-will-it-go-chinas-great-firewall-rising Online C ensorship: W ho A re the G atekeepers of O ur D igital L ives? Engineering and Technology Magazine The Institution of Engineering October 11, 2017 https://eandt.theiet.org/content/articles/2017/10/online-censorship-who-are-the-gatekeepers-of-our-digital-lives/

By the end of 2017, the People's Republic of China (PRC) had the world's largest number of internet users, estimated at over 750 million people. At the same time, the country has one of the most sophisticated and aggressive internet censorship and control regimes in the world. PRC officials have argued that internet controls are necessary for social stability, and intended to protect and strengthen Chinese culture. However, in its 2017 Annual Report, Reporters Without Borders (Reporters Sans Frontieres, RSF) called China the "world's biggest prison for journalists" and warned that the country "continues to improve its arsenal of measures for persecuting journalists and bloggers." China ranks 176th out of 180 countries in RSF's 2017 World Press Freedom Index, surpassed only by Turkmenistan, Eritrea, and North Korea in the lack of press freedom. At the end of 2017, RSF asserted that China was holding 52 journalists and bloggers in prison. The PRC government employs a variety of methods to control online content and expression, including website blocking and keyword filtering; regulating and monitoring internet service providers; censoring social media; and arresting "cyber dissidents" and bloggers who broach sensitive social or political issues. The government also monitors the popular mobile app WeChat. WeChat began as a secure messaging app, similar to WhatsApp, but it is now used for much more than just messaging and calling, such as mobile payments, and all the data shared through the app is also shared with the Chinese government. While WeChat users have recently begun to question how their WeChat data is being shared with the Chinese government, there is little indication that any new protections will be offered in the future. The U.S. government continues to advocate policies to promote internet freedom in China's increasingly restrictive environment and to mitigate the global impact of Chinese government censorship. The Department of State, the Broadcasting Board of Governors (BBG), and Congress have taken an active role in fighting global internet censorship: Since 2008, the State Department has created programs that support digital safety, policy advocacy, technology, and research to help global internet users overcome barriers to accessing the internet, including the Freedom Online Coalition. In 2016, the BBG created the Office of Internet Freedom to oversee the efforts of BBG-funded internet freedom projects, including the research, development, deployment, and use of BBG-funded internet freedom technologies. In 2000, Congress created the Congressional-Executive Commission on China (CECC) to monitor China's compliance with international human rights standards, to encourage the development of the rule of law in the PRC, and to establish and maintain a list of victims of human rights abuses in China. Additionally, the U.S. information and communications technology (ICT) industry has taken steps to advance internet freedom. In 2008, a group of U.S. ICT companies, along with nongovernmental organizations, investors, and universities, formed the Global Network Initiative (GNI). The GNI aims to promote best practices related to the conduct of U.S. companies in countries with poor internet freedom records. In the 115th Congress, the CECC held a hearing on April 26, 2018, on "digital authoritarianism and the global threat to free speech." No legislation has been introduced in the 115th Congress related to global internet freedom in authoritarian regimes.

A well-formed grant proposal is one that is carefully prepared, thoughtfully planned, and concisely packaged. The potential applicant generally seeks first to become familiar with all of the pertinent program criteria of the funding institution. Before developing a proposal, the potential applicant may refer to the information contact listed in the agency or foundation program description to learn whether funding is available, when applicable deadlines occur, and the process used by the grantor agency or private foundation for accepting applications. Grant seekers should know that the basic requirements, application forms, information, and procedures vary among grant-making agencies and foundations. Federal agencies and large foundations may have formal application packets, strict guidelines, and fixed deadlines with which applicants must comply, while smaller foundations may operate more informally and even provide assistance to inexperienced grantseekers. However, the steps outlined in this report generally apply to any grant-seeking effort. Individuals without prior grant proposal writing experience may find it useful to attend a grantsmanship class or workshop. Applicants interested in locating workshops or consulting more resources on grantsmanship and proposal development should consult the internet sites listed at the end of this report and explore other resources in their local libraries. Local governments may obtain grant writing assistance from a state's office of Council of Governments (CSG) or Regional Council. The primary mission of CSG is to promote and strengthen state government in the federal system by providing staff services to organizations of state officials. Grassroots or small faith-based nonprofit organizations can seek the help and advice of larger, more seasoned nonprofit organizations or foundations in their state. The first step in proposal planning is the development of a clear, concise description of the proposed project. To develop a convincing proposal for project funding, the project must fit into the philosophy and mission of the grant-seeking organization or agency; and the need that the proposal is addressing must be well documented and well articulated. Typically, funding agencies or foundations will want to know that a proposed activity or project reinforces the overall mission of an organization or grant seeker, and that the project is necessary. To make a compelling case, the following should be included in the proposal: nature of the project, its goals, needs, and anticipated outcomes; how the project will be conducted; timetable for completion; how best to evaluate the results (performance measures); staffing needs, including use of existing staff and new hires or volunteers; and preliminary budget, covering expenses and financial requirements, to determine what funding levels to seek. When developing an idea for a proposal, it is also important to determine if the idea has already been considered in the applicant's locality or state. A thorough check should be made with state legislators, local government, and related public and private agencies which may currently have grant awards or contracts to do similar work. If a similar program already exists, the applicant may need to reconsider submitting the proposed project, particularly if duplication of effort is perceived. However, if significant differences or improvements in the proposed project's goals can be clearly established, it may be worthwhile to pursue federal or private foundation assistance. For many proposals, community support is essential. Once a proposal summary is developed, an applicant may look for individuals or groups representing academic, political, professional, and lay organizations which may be willing to support the proposal in writing. The type and caliber of community support is critical in the initial and subsequent review phases. Numerous letters of support can influence the administering agency or foundation. An applicant may elicit support from local government agencies and public officials. Letters of endorsement detailing exact areas of project sanction and financial or in-kind commitment are often requested as part of a proposal to a federal agency. Several months may be required to develop letters of endorsement, since something of value (e.g., buildings, staff, services) is sometimes negotiated between the parties involved. Note that letters from Members of Congress may be requested once a proposal has been fully developed and is ready for submission. While money is the primary concern of most grantseekers, thought should be given to the kinds of nonmonetary contributions that may be available. In many instances, academic institutions, corporations, and other nonprofit groups in the community may be willing to contribute technical and professional assistance, equipment, or space to a worthy project. Not only can such contributions reduce the amount of money being sought, but evidence of such local support is often viewed favorably by most grant-making agencies or foundations. Many agencies require, in writing, affiliation agreements (a mutual agreement to share services between agencies) and building space commitments prior to either grant approval or award. Two useful methods of generating community support may be to form a citizen advisory committee or to hold meetings with community leaders who would be concerned with the subject matter of the proposal. The forum may include the following: discussion of the merits of the proposal; development of a strategy to create proposal support from a large number of community groups, institutions, and organizations; and generation of data in support of the proposal. Once the project has been specifically defined, the grant seeker needs to research appropriate funding sources. Both the applicant and the grantor agency or foundation should have the same interests, intentions, and needs if a proposal is to be considered an acceptable candidate for funding. It is generally not productive to send out proposals indiscriminately in the hope of attracting funding. Grant-making agencies and foundations whose interest and intentions are consistent with those of the applicant are the most likely to provide support. An applicant may cast a wide, but targeted, net. Many projects may only be accomplished with funds coming from a combination of sources, among them federal, state, or local programs and grants from private or corporate foundations. The best funding resources are now largely on the internet. Key sources for funding information include the federal government's Assistance Listings at https://beta.sam.gov , and the Foundation Center, http://www.foundationcenter.org , the clearinghouse of private and corporate foundation funding. For a summary of federal programs and sources, see CRS Report RL34012, Resources for Grantseekers , by [author name scrubbed] and [author name scrubbed], and other CRS reports on topics such as community or social services block grants to states, rural development assistance, federal allocations for homeland security, and other funding areas. A review of the government or private foundation's program descriptions' objectives and uses, as well as any use restrictions, can clarify which programs might provide funding for a project. When reviewing individual beta.SAM.gov Assistance Listing program descriptions, applicants may also target the related programs as potential resources. Also, the kinds of projects the agency or foundation funded in the past may be helpful in fashioning a grant proposal. Program listings at beta.SAM.gov Assistance Listings or foundation information will often include examples of past funded projects. Many federal grants do not go directly to the final beneficiary, but are awarded through "block" or "formula" grants to state or local agencies which, in turn, distribute the funds (called "pass-through"). States may post funding opportunities and subaward grants originating in federal formula or block grant allocations. Grantseekers should look on state government sites for these funding opportunities--each state handles subawarding differently. For more information, see CRS Report R40486, Block Grants: Perspectives and Controversies , by [author name scrubbed] and [author name scrubbed], and CRS Report R40638, Federal Grants to State and Local Governments: A Historical Perspective on Contemporary Issues , by [author name scrubbed]. There are many types of foundations: national, family, community, corporate, etc. For district or community projects, as a general rule, it is a good idea to look for funding sources close to home, which are frequently most concerned with solving local problems. Corporations, for example, tend to support projects in areas where they have offices or plants. Most foundations only provide grants to nonprofit organizations (those registered by the Internal Revenue Service as having 501(c) tax-exempt status), though the Foundation Center publishes information about foundation grants to individuals. Once a potential grantor agency or foundation is identified, an applicant may contact it and ask for a grant application kit or information. Federal agencies may refer applicants to the website Grants.gov ( http://www.grants.gov ). Later, the grant seeker may ask some of the grantor agency or foundation personnel for suggestions, criticisms, and advice about the proposed project. In many cases, the more agency or foundation personnel know about the proposal, the better the chance of support and of an eventual favorable decision. Federal agencies are required to report funding information as funds are approved, increased, or decreased among projects within a given state depending on the type of required reporting. Also, grant seekers may consider reviewing the federal budget for the current and future fiscal years to determine proposed dollar amounts for particular budget functions. The grant seeker should carefully study the eligibility requirements for each government or foundation program under consideration (see, for example, the Criteria for Applying and Compliance Requirements sections of the beta.SAM.gov Assistance Listing program description). Federal department and agency websites generally include additional information about their programs. Beta.SAM.gov Assistance Listing program descriptions and websites include information contacts. Applicants should direct questions and seek clarification about requirements and deadlines from the contacts. The applicant may learn that he or she is required to provide services otherwise unintended such as a service to particular client groups, or involvement of specific institutions. It may necessitate the modification of the original concept in order for the project to be eligible for funding. Questions about eligibility should be discussed with the appropriate program officer. For federal grants, funding opportunities notices appear on websites such as Grants.gov at http://www.grants.gov or FedConnect at https://www.fedconnect.net . Applicants can search and sign up for email notification of funding opportunities, and download applications packages. To submit applications, registration is required. The grantseeker must also obtain Dun and Bradstreet (DUNS) and register with System for Award Management (SAM): Grants.gov provides instructions and links. Deadlines for submitting applications are often not negotiable, though some federal programs do have open application dates (refer to the beta.SAM.gov program description). For private foundation funding opportunities, grant seekers should contact foundations or check the Foundation Center's website for daily postings of Requests for Proposals (RFPs) at http://foundationcenter.org/findfunders/fundingsources/rfp.html . Specified deadlines are usually associated with strict timetables for agency or foundation review. Some programs have more than one application deadline during the fiscal or calendar year. Applicants should plan proposal development around the established deadlines. The grant seeker, after narrowing the field of potential funders, may want to approach the most likely prospects to confirm that they might indeed be interested in the project. Many federal agencies and foundations are willing to provide an assessment of a preliminary one- or two-page concept paper before a formal proposal is prepared. The concept paper should give a brief description of the needs to be addressed, who is to carry out the project, what is to be accomplished, by what means, how long it will take, how the accomplishments will be measured, plans for the future, how much it will cost, and the ways this proposal relates to the mission of the funding source. Developing a concept paper is excellent preparation for writing the final proposal. The grant seeker should try to see the project or activity from the viewpoint of the grant-making agency or foundation. Like the proposal, the concept paper should be brief, clear, and informative. It is important to understand that from the funder's vantage point, the grant is not seen as the end of the process, but only as the midpoint. The funder will want to know what will happen to the project once the grant ends. For example, will it be self-supporting or will it be used as a demonstration to apply for further funding? Will it need ongoing support, for how long, and what are the anticipated outcomes? If the funding source expresses interest in the concept paper, the grant seeker can ask for suggestions, criticism, and guidance, before writing the final proposal. Feedback and dialogue are essential elements to a successful funding proposal. Throughout the proposal writing stage, an applicant may want to keep notes on ideas and related materials for review. The gathering of documents such as articles of incorporation, tax exemption certificates, and bylaws should be completed, if possible, before the writing begins. At the end of this report, useful websites cover proposal writing, give sample grant proposals (including a template for writing a proposal), and link to federal program information and grants management circulars. An effective grant proposal has to make a compelling case. Not only must the idea be a good one, but so must the presentation. Things to be considered include the following: All of the requirements of the funding source must be met: prescribed format, necessary inclusions, deadlines, etc. The proposal should have a clear, descriptive title. The proposal should be a cohesive whole, building logically, with one section leading to another; this is an especially important consideration when several people have been involved in its preparation. Language should be clear and concise, devoid of jargon; explanations should be offered for acronyms and terms which may be unfamiliar to someone outside the field. Each of the parts of the proposal should provide as brief but informative a narrative as possible, with supporting data relegated to an appendix. At various stages in the proposal writing process, the proposal should be reviewed by a number of interested and disinterested parties. Each time it has been critiqued, it may be necessary to rethink the project and its presentation. While such revision is necessary to clarify the proposal, one of the dangers is that the original excitement of those making the proposal sometimes gets written out. Somehow, this must be conveyed in the final proposal. Applicants are advised: make it interesting! The basic sections of a standard grant proposal include the following: 1. cover letter 2. proposal summary or abstract 3. introduction describing the grant seeker or organization 4. problem statement (or needs assessment) 5. project objectives 6. project methods or design 7. project evaluation 8. future funding 9. project budget The one-page cover letter should be written on the applicant's letterhead and should be signed by the organization's highest official. It should be addressed to the individual at the funding source with whom the organization has dealt, and should refer to earlier discussions. While giving a brief outline of the needs addressed in the proposal, the cover letter should demonstrate a familiarity with the mission of the grantmaking agency or foundation and emphasize the ways in which this project contributes to these goals. The grant proposal summary outlines the proposed project and should appear at the beginning of the proposal. It could be in the form of a cover letter or a separate page, but should definitely be brief--no longer than two or three paragraphs. The summary should be prepared after the grant proposal has been developed in order to encompass all the key points necessary to communicate the objectives of the project. It is this document that becomes the cornerstone of the proposal, and the initial impression it gives will be critical to the success of the venture. In many cases, the summary will be the first part of the proposal package seen by agency or foundation officials and very possibly could be the only part of the package that is carefully reviewed before the decision is made to consider the project any further. When letters of support are written, the summary may be used as justification for the project. The summary should include a description of the applicant, a definition of the problem to be solved, a statement of the objectives to be achieved, an outline of the activities and procedures to be used to accomplish those objectives, a description of the evaluation design, plans for the project at the end of the grants, and a statement of what it will cost the funding agency. It may also identify other funding sources or entities participating in the project. For federal funding, the applicant should develop a project which can be supported in view of the local need. Alternatives, in the absence of federal support, should be pointed out. The influence of the project both during and after the project period should be explained. The consequences of the project as a result of funding should be highlighted, for example, statistical projections of how many people might benefit from the project's accomplishments. In the introduction, applicants describe their organization and demonstrate that they are qualified to carry out the proposed project--they establish their credibility and make the point that they are a good investment, in no more than a page. Statements made here should be carefully tailored, pointing out that the overall goals and purposes of the applicant are consistent with those of the funding source. This section should provide the following: A brief history of the organization, its past and present operations, its goals and mission, its significant accomplishments, any success stories. Reference should be made to grants, endorsements, and press coverage the organization has already received (with supporting documentation included in the appendix). Qualifications of its professional staff, and a list of its board of directors. Indicate whether funds for other parts of the project are being sought elsewhere; such evidence will strengthen the proposal, demonstrating to the reviewing officer that all avenues of support have been thoroughly explored. An individual applicant should include a succinct resume relating to the objectives of the proposal (what makes the applicant eligible to undertake the work or project?). This section lays out the reason for the proposal. It should make a clear, concise, and well-supported statement of the problem to be addressed, from the beneficiaries' viewpoint, in no more than two pages. The best way to collect information about the problem is to conduct and document both a formal and informal needs assessment for a program in the target or service area. The information provided should be both factual and directly related to the problem addressed by the proposal. Areas to document are as follows: Purpose for developing the proposal. Beneficiaries--who are they and how will they benefit. Social and economic costs to be affected. Nature of the problem (provide as much hard evidence as possible). How the applicant or organization came to realize the problem exists, and what is currently being done about the problem. Stress what gaps exist in addressing the problem that will be addressed by the proposal. Remaining alternatives available when funding has been exhausted. Explain what will happen to the project and the impending implications. Most important, the specific manner through which problems might be solved. Review the resources needed, considering how they will be used and to what end. One of the pitfalls to be avoided is defining the problem as a lack of program or facility (i.e., giving one of the possible solutions to a problem as the problem itself). For example, the lack of a medical center in an economically depressed area is not the problem--the problem is that poor people in the area have health needs that are not currently being addressed. The problem described should be of reasonable dimensions, with the targeted population and geographic area clearly defined. It should include a retrospective view of the situation, describing past efforts to ameliorate it, and making projections for the future. The problem statement, developed with input from the beneficiaries, must be supported by statistics and statements from authorities in the fields. The case must be made that the applicant, because of its history, demonstrable skills, and past accomplishments, is the right organization to solve the problem. There is a considerable body of literature on the exact assessment techniques to be used. Any local, regional, or state government planning office, or local university offering course work in planning and evaluation techniques should be able to provide excellent background references. Types of data that may be collected include historical, geographic, quantitative, factual, statistical, and philosophical information, as well as studies completed by colleges, and literature searches from public or university libraries. Local colleges or universities which have a department or section related to the proposal topic may help determine if there is interest in developing a student or faculty project to conduct a needs assessment. It may be helpful to include examples of the findings for highlighting in the proposal. Once the needs have been described, proposed solutions have to be outlined, wherever possible in quantitative terms. The population to be served, time frame of the project, and specific anticipated outcomes must be defined. The figures used should be verifiable. If the proposal is funded, the stated objectives will probably be used to evaluate program progress, so they should be realistic. There is literature available to help identify and write program objectives. It is important not to confuse objectives with methods or strategies toward those ends. For example, the objective should not be stated as "building a prenatal clinic in Adams County," but as "reducing the infant mortality rate in Adams County to X percent by a specific date." The concurrent strategy or method of accomplishing the stated objective may include the establishment of mobile clinics that bring services to the community. The program design refers to how the project is expected to work and solve the stated problem. Just as the statement of objectives builds upon the problem statement, the description of methods or strategies builds upon the statement of objectives. For each objective, a specific plan of action should be laid out. It should delineate a sequence of justifiable activities, indicating the proposed staffing and timetable for each task. This section should be carefully reviewed to make sure that what is being proposed is realistic in terms of the applicant's resources and time frame. Outline the following: An evaluation plan should be a consideration at every stage of the proposal's development. Data collected for the problem statement form a comparative basis for determining whether measurable objectives are indeed being met, and whether proposed methods are accomplishing these ends; or whether different parts of the plan need to be fine-tuned to be made more effective and efficient. Among the considerations will be whether evaluation will be done by the organization itself or by outside experts. The organizations will have to decide whether outside experts have the standing in the field and the degree of objectivity that would justify the added expense, or whether the job could be done with sufficient expertise by its own staff, without taking too much time away from the project itself. Methods of measurement, whether standardized tests, interviews, questionnaires, observation, and so forth, will depend upon the nature and scope of the project. Procedures and schedules for gathering, analyzing, and reporting data will need to be spelled out. The evaluation component is two-fold: (1) product evaluation and (2) process evaluation. "Product evaluation" addresses results that can be attributed to the project, as well as the extent to which the project has satisfied its stated objectives. "Process evaluation" addresses how the project was conducted, in terms of consistency with the stated plan of action and the effectiveness of the various activities within the plan. Most federal agencies now require some form of program evaluation among grantees. The requirements of the proposed project should be explored carefully. Evaluations may be conducted by an internal staff member, an evaluation firm, or both. Many federal grants include a specific time frame for performance review and evaluation. For instance, several economic development programs require grant recipients to report on a quarterly and annual basis. In instances where there are no specified evaluation periods, the applicant should state the amount of time needed to evaluate, how the feedback will be disseminated among the proposed staff, and a schedule for review and comment. Evaluation designs may start at the beginning, middle, or end of a project, but the applicant should specify a start-up time. It is desirable and advisable to submit an evaluation design at the start of a project for two reasons: Convincing evaluations require the collection of appropriate baseline data before and during program operations; and If the evaluation design cannot be prepared at the outset, then a critical review of the program design may be advisable. Even if the evaluation design has to be revised as the project progresses, it is much easier and cheaper to modify a good design. If the problem is not well defined and carefully analyzed for cause and effect relationships, then a good evaluation design may be difficult to achieve. Sometimes a pilot study is needed to begin the identification of facts and relationships. Often a thorough literature search may be sufficient. Evaluation requires both coordination and agreement among program decisionmakers. Above all, the federal grantor agency's or foundation's requirements should be highlighted in the evaluation design. Grantor agencies also may require specific evaluation techniques such as designated data formats (an existing information collection system) or they may offer financial inducements for voluntary participation in a national evaluation study. The applicant should ask specifically about these points. In addition, for federal programs, consult the "Criteria for Applying" section of the beta.SAM.gov Assistance Listing program description to determine the exact evaluation methods to be required for a specific program if funded. The last narrative part of the proposal explains what will happen to the program once the grant ends. It should describe a plan for continuation beyond the grant period, and outline all other contemplated fund-raising efforts and future plans for applying for additional grants. Projections for operating and maintaining facilities and equipment should also be given. The applicant may discuss maintenance and future program funding if program funds are for construction activity; and may account for other needed expenditures if the program includes purchase of equipment. Although the degree of specificity of any budget will vary depending upon the nature of the project and the requirements of the funding source, a complete, well-thought-out budget serves to reinforce the applicant's credibility and to increase the likelihood of the proposal being funded. The estimated expenses in the budget should build upon the justifications given in the narrative section of the proposal. A well-prepared budget should be reasonable and demonstrate that the funds being asked for will be used wisely. The budget should be as concrete and specific as possible in its estimates. Every effort should be made to be realistic, to estimate costs accurately, and not to underestimate staff time. The budget format should be as clear as possible. It should begin with a Budget Summary, which, like the Proposal Summary, is written after the entire budget has been prepared. Each section of the budget should be in outline form, listing line items under major headings and subdivisions. Each of the major components should be subtotaled with a grand total placed at the end. If the funding source provides forms, most of these elements can simply be filled into the appropriate spaces. In general, budgets are divided into two categories: personnel costs and nonpersonnel costs. In preparing the budget, the applicant may first review the proposal and make lists of items needed for the project. The personnel section usually includes a breakdown of the following items: salaries (including increases in multiyear projects), fringe benefits such as health insurance and retirement plans, and consultant and contract services. The items in the nonpersonnel section will vary widely, but may include space/office rental or leasing costs, utilities, purchase or rental of equipment, training to use new equipment, and photocopying, office supplies. Some hard-to-pin-down budget areas are utilities, rental of buildings and equipment, salary increases, food, telephones, insurance, and transportation. Budget adjustments are sometimes made after the grant award, but this can be a lengthy process. The applicant should be certain that implementation, continuation, and phase-down costs can be met. Costs associated with leases, evaluation systems, hard/soft match requirements, audits, development, implementation and maintenance of information and accounting systems, and other long-term financial commitments should be considered. A well-prepared budget justifies all expenses and is consistent with the proposal narrative. Some areas in need of an evaluation for consistency are as follows: Salaries in the proposal in relation to those of the applicant organization should be similar. If new staff persons are being hired, additional space and equipment should be considered, as necessary. If the budget calls for an equipment purchase, it should be the type allowed by the grantor agency. If additional space is rented, the increase in insurance should be supported. In the case of federal grants, if an indirect cost rate applies to the proposal, such as outlined by the Office of Management and Budget (OMB) in Circulars such as numbers A-122, A-21, and A-87 (see https://www.whitehouse.gov/omb/information-for-agencies/circulars ), the division between direct and indirect costs should not be in conflict, and the aggregate budget totals should refer directly to the approved formula. If matching funds are required, the contributions to the matching fund should be taken out of the budget unless otherwise specified in the application instructions. In learning to develop a convincing budget and determining appropriate format, reviewing other grant proposals is often helpful. The applicant may ask government agencies and foundations for copies of winning grants proposals. Grants seekers may find the following examples of grants budgets helpful: The Basics of Preparing a Budget for a Grant Proposal http://nonprofit.about.com/od/foundationfundinggrants/a/grantbudget.htm Grant Space, Knowledge Base: Examples of Nonprofit Budgets http://grantspace.org/tools/knowledge-base/Nonprofit-Management/Establishment/budget-examples Proposal Budgeting Basics http://foundationcenter.org/getstarted/tutorials/prop_budgt/index.html Sample Budget Form (National Endowment for the Humanities) http://www.neh.gov/files/grants/neh_sample_budget_form_april_2012.pdf In preparing budgets for government grants, the applicant may keep in mind that funding levels of federal assistance programs change yearly. It is useful to review the appropriations and average grants or loans awarded over the past several years to try to project future funding levels: see "Financial Information" section of the beta.SAM.gov Assistance Listing program description for fiscal year appropriations and estimates; and "Range and Average of Financial Assistance" for prior years' awards. However, it is safer never to anticipate that the income from the grant will be the sole support for larger projects. This consideration should be given to the overall budget requirements, and in particular, to budget line items most subject to inflationary pressures. Restraint is important in determining inflationary cost projections (avoid padding budget line items), but the applicant may attempt to anticipate possible future increases. For federal grants, it is also important to become familiar with grants management requirements. The beta.SAM.gov Assistance Listings database identifies in the program description OMB circulars applicable to each federal program. Applicants should review appropriate documents while developing a proposal budget because they are essential in determining items such as cost principles, administrative and audit requirements and compliance, and conforming with government guidelines for federal domestic assistance. OMB circulars are available in full text on the web at https://www.whitehouse.gov/omb/circulars/ . To coordinate federal grants to states, Executive Order 12372, "Intergovernmental Review of Federal Programs," was issued to foster intergovernmental partnership and strengthen federalism by relying on state and local processes for the coordination and review of proposed federal financial assistance and direct federal development. The executive order allows each state to designate an office to perform this function, addresses of which may be found at the OMB website at https://www.whitehouse.gov/wp-content/uploads/2017/11/SPOC-Feb.-2018.pdf . States that are not listed on this web page have chosen not to participate in the intergovernmental review process. If the applicant is located within one of these states, he or she may still send application materials directly to a federal awarding agency. Lengthy documents that are referred to in the narrative are best added to the proposal in an appendix. Examples include letters of endorsement, partial list of previous funders, key staff resumes, annual reports, statistical data, maps, pictorial material, and newspaper and magazine articles about the organizations. Nonprofit organizations should include an IRS 501(c)(3) Letter of Tax Exempt Status. GrantSpace, Knowledge Base, How do I write a grant Proposal? http://grantspace.org/tools/knowledge-base/Funding-Research/proposal-writing/grant-proposals Introduction to Proposal Writing Short Course (Foundation Center) https://grantspace.org/training/introduction-to-proposal-writing/ Tips on Writing a Grant Proposal (Environmental Protection Agency) https://www.epa.gov/grants/tips-writing-competitive-grant-proposal-preparing-budget Writing a Successful Grant Proposal (Minnesota Council on Foundations) https://www.mcf.org/writing-successful-grant-proposal Writing a Winning G rant Proposal (Education Money) http://www.educationmoney.com/federal_write_proposal.html

This report is intended for Members and staff assisting grant seekers in districts and states and covers writing proposals for both government and private foundation grants. In preparation for writing a proposal, the report first discusses preliminary information gathering and preparation, developing ideas for the proposal, gathering community support, identifying funding resources, and seeking preliminary review of the proposal and support of relevant administrative officials. The second section of the report covers the actual writing of the proposal, from outlining of project goals, stating the purpose and objectives of the proposal, explaining the program methods to solve the stated problem, and how the results of the project will be evaluated, to long-term project planning, and, finally, developing the proposal budget. The last section of the report provides a listing of free grants-writing websites, including guidelines from the Catalog of Federal Domestic Assistance and the Foundation Center's "Introduction to Proposal Writing." Related CRS reports are CRS Report RL34035, Grants Work in a Congressional Office, by [author name scrubbed] and [author name scrubbed], and CRS Report RL34012, Resources for Grantseekers, by [author name scrubbed] and [author name scrubbed]. This report will be updated as needed.

TANF law lists 12 categories of work activities that recipients of assistance may engage in and be counted toward its work participation standards. The 12 listed categories are (1) unsubsidized employment; (2) subsidized private sector employment; (3) subsidized public sector employment; (4) work experience; (5) on-the-job training; (6) job search and job readiness assistance; (7) community services programs; (8) vocational educational training; (9) job skills training directly related to employment; (10) education directly related to employment (for those without a high school degree or equivalent); (11) satisfactory attendance at a secondary school; and (12) provision of child care to a participant of a community service program. Under prior HHS regulations, states were allowed to define the specific activities included in each of these federal categories. However, DRA required HHS to issue regulations by June 30, 2006, to define TANF work activities to ensure consistent measurement of work. The regulations, published as interim final regulations on June 29, 2006, provide definitions for each of 12 federal categories of work activities listed in the law, with the explanatory preamble providing specific examples of activities that can or cannot be counted within these categories. This report pulls together the official definition of each of the 12 categories (as stated in the regulatory text) with the information in the preamble that provides a more detailed description of what activities may, and what activities may not, be counted within each of the categories. " Unsubsidized employment means full- or part-time employment in the public or private sector that is not subsidized by TANF or any other public program." Employment not directly subsidized by TANF or other public funds counts. However, it includes employment where employers claim a tax credit for hiring disadvantaged workers. It also includes self-employment. If a recipient is in a job where the employer receives a "direct subsidy" from public funds (other than tax credits, discussed above), the recipient is considered in subsidized employment. " Subsidized Private Sector Employment means employment in the private sector for which the employer receives a subsidy from TANF or other public funds to offset some or all of the wages and costs of employing a recipient." Participation on a job where the employer receives a subsidy and the participant is paid wages and receives the same benefits as unsubsidized employees who perform similar work. Examples include a job where (1) TANF funds that would otherwise be paid as benefits instead reimburse some or all of the employer's costs for wages, benefits, taxes, and insurance; and (2) a third-party (e.g., nonprofit organization) acts as a temporary staffing agency and is paid a fee from TANF to cover the participant's salary and support services. It also includes "supported employment" programs under the Rehabilitation Act of 1973 for individuals with disabilities. Employer's receipt of subsidies through the tax code does not make a job "subsidized employment." Such jobs should be counted as "unsubsidized employment." " Subsidized Public Sector Employment means employment in the public sector for which the employer receives a subsidy from TANF or other public funds to offset some or all of the wages and costs of employing a recipient." See the discussion of " Subsidized Private Sector Employment ," above. See the discussion of " Subsidized Private Sector Employment ," above. " Work experience (including work associated with the refurbishing of publicly assisted housing) if sufficient private sector employment is not available means a work activity, performed in return for welfare, that provides an individual with an opportunity to acquire the general skills, training, knowledge, and work habits necessary to obtain employment. The purpose of work experience is to improve the employability of those who cannot find unsubsidized employment. The activity must be supervised by an employer, work site sponsor, or other responsible party on an ongoing basis and no less frequently than daily." Activity is sometimes called "workfare" because the activity is performed in return for the TANF grant and employees do not receive wages or compensation. Activities such as job search, job readiness activities, and vocational education. " On the job training means training in the public or private sector that is given to a paid employee while he or she is engaged in productive work and that provides knowledge and skills essential to the full and adequate performance of the job. On the job training must be supervised by an employer, work site sponsor, or other responsible party on an ongoing basis no less frequently than daily." For this activity, states subsidize the costs of training (as opposed to wages and benefits) provided to the participant, and there is an expectation that the participant will become a regular, unsubsidized employee. For individuals with disabilities who are in "supported employment," the activity may be considered on-the-job training if it includes significant on-site training. "Supported employment" that does not include significant on-site training should be counted as "subsidized employment" rather than on-the-job training. " Job search and job readiness means the act of seeking or obtaining employment, preparation to seek or obtain employment, including life skills training, and substance abuse treatment, mental health treatment, or rehabilitation activities for those who are otherwise employable. Such treatment or therapy must be determined to be necessary and certified by a qualified medical or mental health professional. Job search and job readiness assistance activities must be supervised by the TANF agency or other responsible party on an ongoing basis no less frequently than daily." Note: Participation in this activity may be counted for six weeks (12 weeks in certain circumstances) in a fiscal year. Job search includes making contacts with employers (in person, via telephone, etc.) to learn of suitable job openings, applying for vacancies, and interviewing for jobs. Job readiness basically comprises two types of activities: (1) preparation necessary to begin a job search, such as preparing a resume or job application, training in interviewing skills, and training in workplace expectation and life skills; and (2) activities to remove barriers to employment, such as substance abuse treatment, mental health treatment, or rehabilitation activities. Activities that do not involve seeking or preparing for work--such as activities associated with children's dental checkups, immunization, and school attendance--do not count; parenting skills training or participation in Head Start (though being a Head Start volunteer may be considered community service; see below); recovery periods from illness; and activities to promote a healthier lifestyle, such as smoking cessation. English as a Second Language (ESL) is not countable as job readiness, but counts as either job skills training or education directly related to employment (see below). " Community service programs means structured programs and embedded activities in which TANF recipients perform work for the direct benefit of the community under the auspices of public or nonprofit organizations. Community service programs must be limited to projects that serve a useful community purpose in fields such as health, social service, environmental protection, education, urban and rural redevelopment, welfare, recreation, public facilities, public safety, and child care. Community service programs are designed to improve the employability of recipients not otherwise able to obtain employment, and must be supervised on an ongoing basis no less frequently than daily. A State agency shall take into account, to the extent possible, the prior training, experience, and skills of a recipient in making appropriate community service assignments." Examples include work in a school, such as serving as a teacher's aide; helping as a parent volunteer in a Head Start program; work performed in a church, such as preparing meals for the needy; and participation in Americorps, Volunteers in Service to America (VISTA), or private volunteer organizations. Community service does not include participation in educational activities, substance abuse treatment programs, mental health and family violence counseling, life skills classes, job readiness instruction, or caring for a disabled family member; nor does community service include unstructured or unsupervised activities such as shoveling a neighbor's sidewalk or helping with errands, or serving as a foster parent. " Vocational educational training (not to exceed 12 months with respect to any individual) means organized educational programs that are directly related to the preparation of individuals for employment in current or emerging occupations requiring training other than a baccalaureate or advanced degree. Vocational educational training must be supervised on an ongoing basis no less frequently than daily." Programs that prepare an individual for a specific trade, occupation, or vocation count. These may be provided by educational or training organizations, including vocational-technical schools, community colleges, post-secondary institutions, nonprofit organizations, and secondary schools that offer vocational education. Hours in monitored study sessions structured by the state count as vocational educational training. Programs leading to a baccalaureate (four-year) degree or advanced degree. Also not countable are general basic skills programs and language training (except as mentioned above), substance abuse counseling and treatment, mental health services, and other rehabilitative activities. Programs leading to a high school degree should be counted instead under satisfactory attendance at a secondary school (see below). Unstructured and supervised homework and study time do not count as hours in vocational educational training. " Job skills training directly related to employment means training or education for job skills required by an employer to provide an individual with the ability to obtain employment or to advance or adapt to the changing demands of the workplace. Job skills training directly related to employment must be supervised on an ongoing basis no less frequently than daily." Customized training to meet the skills of a specific employer or general training that prepares an individual for employment. This includes literacy and language instruction if the training is explicitly focused on skills needed for employment, or if the instruction is combined with job training. Barrier removal activities like substance abuse counseling or treatment, mental health services, and rehabilitative services count. " Education directly related to employment, in the case of a recipient who has not received a high school diploma or a certificate of high school equivalency means education related to a specific occupation, job, or job offer. Education directly related to employment must be supervised on an ongoing basis no less frequently than daily." Examples include adult basic education, ESL, and, where needed for employment by employers or occupations, programs leading to a General Educational Development (GED) or High School Equivalency diploma. Hours in monitored study sessions in the course of these programs would count as education directly related to employment. Education unrelated to specific occupations and unsupervised hours of homework do not count. " Satisfactory attendance at secondary school or in a course of study leading to a certificate of general equivalence, in the case of a recipient who has not completed secondary school or received such a certificate means regular attendance, in accordance with the requirements of the secondary school or course of study, at a secondary school or in a course of study leading to a certificate of general equivalence, in the case of a recipient who has not completed secondary school or received such a certificate. This activity must be supervised on an ongoing basis no less frequently than daily." Regular attendance at a secondary school (an activity primarily targeted to minor parents) or GED programs counts. This activity is not restricted to education needed for employment. Hours in monitored study count. Unsupervised hours of homework. " Providing child care services to an individual who is participating in a community service program means providing child care to enable another TANF recipient to participate in a community services program. This activity must be supervised on an ongoing basis no less frequently than daily." No further examples are offered. Providing child care to a TANF recipient who participates in activities other than community service does not count.

The Deficit Reduction Act of 2005 (DRA, P.L. 109-171) included changes to work participation standards under the Temporary Assistance for Needy Families (TANF) block grant that seek to increase the share of the cash welfare caseload engaged in work or job preparation activities. The law also required the Department of Health and Human Services (HHS) to issue regulations defining TANF work activities to ensure a consistent measurement of work activity across states. Highlights of the regulations (published June 29, 2006) include requiring all activities to be supervised (many on a daily basis); disallowing four-year or advanced college degrees to count as vocational educational training; and explicitly allowing treatment for the removal of certain barriers to employment, such as substance abuse and mental or physical disability to count toward the participation standards, though for a limited period each year as a "job readiness" activity. It also allows "supported employment" for individuals with disabilities to count. Additionally, the definition of job skills training directly related to employment appears to allow a wide range of training and educational activities. This report will be updated as warranted.

M ortgage debt cancellation occurs when lenders engage in loss-mitigation solutions that either (1) restructure the loan and reduce the principal balance or (2) sell the property, either in advance, or as a result of foreclosure proceedings. Under current law, the canceled debt (sometimes referred to as discharge of indebtedness) may be income subject to taxation. The Mortgage Forgiveness Debt Relief Act of 2007 ( P.L. 110-142 ) signed into law on December 20, 2007, temporarily excluded qualified COD income. Thus, the act allowed taxpayers who did not qualify for the existing exceptions to exclude COD income. The provision was effective for debt discharged before January 1, 2010. The Emergency Economic Stabilization Act of 2008 ( P.L. 110-343 ) extended the exclusion of COD income to debt discharged before January 1, 2013. The American Taxpayer Relief Act of 2012 ( P.L. 112-240 ) subsequently extended the exclusion through the end of 2013. The Tax Increase Prevention Act of 2014 ( P.L. 113-295 ) extended the exclusion through the end of 2014. The exclusion was extended again through the end of 2016 by Division Q of P.L. 114-113 --the Protecting Americans from Tax Hikes Act (or "PATH" Act). Most recently, the Bipartisan Budget Act of 2018 ( P.L. 115-123 ) retroactively extended the exclusion through the end of 2017. The extension also allowed for debt discharged after 2017 to be excluded from income if the taxpayer had entered into a binding written agreement before January 1, 2018. The rationales for this change are to minimize hardship for households in distress and to ensure that non-tax-related homeowner retention efforts are not thwarted by tax policy. Critics argue that the exclusion could encourage homeowners to be less responsible about fulfilling debt obligations. Critics may also argue that owner-occupied housing is sufficiently subsidized even without a COD income exclusion. This report begins with an overview and analysis of the historical tax treatment of canceled debt income. Next, the changes enacted by P.L. 110-142 , P.L. 110-343 , P.L. 112-240 , P.L. 113-295 , P.L. 114-113 , and P.L. 115-123 are reviewed . A discussion of policy options concludes. For federal income tax purposes, there are two types of income that may arise when an individual's mortgage is fully or partially canceled: cancellation of indebtedness income and gain from the disposition of property. When all or part of a taxpayer's debt is forgiven, the amount of the canceled debt is ordinarily included in the taxpayer's gross income. This income is typically referred to as cancellation of debt (COD) income. The borrower will realize ordinary income to the extent the canceled debt exceeds the value of any cash or property given to the lender in exchange for cancelling the debt. Lenders report canceled debt to the Internal Revenue Service (IRS) using Form 1099-C, and borrowers must generally include the amount in gross income in the year of discharge. Historically, there have been several exceptions to the general rule that canceled debt is included in the gross income of the borrower. Section 108 of the Internal Revenue Code (IRC) contains two exceptions that are particularly relevant in the case of canceled home mortgage debt: a borrower may exclude canceled debt from gross income if (1) the debt is discharged in Title 11 bankruptcy or (2) the borrower is insolvent (that is, has liabilities that exceed the fair market value of his or her assets, determined immediately prior to discharge). In the case of the bankruptcy exception, the debt must be discharged by the court overseeing the bankruptcy proceedings or pursuant to a plan approved by that court. No involvement by a court is necessary for a taxpayer to claim an insolvency exception--the taxpayer calculates his or her assets and liabilities to determine whether he or she is insolvent. For an insolvent taxpayer, the amount of COD income that may be excluded is limited to the amount by which the taxpayer is insolvent. For both the bankruptcy and insolvency exceptions, a taxpayer who excludes canceled debt must essentially give back some of the benefit of the exclusion. Specifically, the taxpayer must reduce certain beneficial tax attributes, including basis in property, that would otherwise decrease the taxpayer's income or tax liability in future years. The attributes are reduced until the reductions generally account for the excluded amount. As a result of the attribute reduction, the taxpayer may be subject to tax on the excluded COD income in years following the year of discharge--in other words, the tax on the COD income is deferred. In addition to the IRC Section 108 exclusions, there are several other circumstances under which COD income may be excluded. For example, a taxpayer with nonrecourse, as opposed to recourse, debt will not realize COD income. Other examples of when COD income may be excluded from the borrower's income are if the cancellation was intended to be a gift or was the result of a disputed debt. When an individual sells property, the excess of the sales price over the original cost plus improvements (adjusted basis) is normally gain subject to tax. If the property was held for more than 12 months, the gain is taxed at a maximum rate of 15% rather than regular income tax rates. If the property was held for less than 12 months, the gain is taxed at regular income tax rates. In situations involving canceled home mortgage debt, if the lender takes the home in exchange for the debt cancellation, the homeowner realizes gain from the disposition of property in the amount that the property's fair market value (or the amount of outstanding debt, in the case of nonrecourse debt) exceeds the taxpayer's adjusted basis in the property. A taxpayer may have both gain from the disposition of property and COD income. IRC Section 121 provides an exclusion for gain from the sale or disposition of a personal residence. The provision excludes gain of up to $250,000 for single taxpayers and $500,000 for married couples filing joint returns if the taxpayer meets a use test (has used the house as the principal residence for at least two of the last five years) and an ownership test (has owned the house for at least two of the last five years). A taxpayer who does not meet the qualifications may be eligible for a partial exclusion if the home was sold because of a change in employment or health or due to unforeseen circumstances. Additionally, other taxpayers may qualify for special treatment (e.g., members of the Armed Forces). The exclusion can generally be used every two years. On December 20, 2007, The Mortgage Forgiveness Debt Relief Act of 2007 ( P.L. 110-142 ) was signed into law. The act, among other things, excluded discharged qualified residential debt from gross income. Qualified indebtedness is defined as debt, limited to $2 million ($1 million if married filing separately), incurred in acquiring, constructing, or substantially improving the taxpayer's principal residence that is secured by such residence. It also includes refinancing of this debt, to the extent that the refinancing does not exceed the amount of refinanced indebtedness. The taxpayer was required to reduce the basis in their principal residence by the amount of the excluded income. The provision did not apply if the discharge was on account of services performed for the lender or any other factor not directly related to a decline in the residence's value or to the taxpayer's financial condition. The provision applied to debt discharges that are made on or after January 1, 2007, and before January 1, 2010. The Emergency Economic Stabilization Act of 2008 ( P.L. 110-343 ) extended the exclusion described above through the end of 2012. Subsequently, the American Taxpayer Relief Act of 2012 ( P.L. 112-240 ) extended the exclusion through the end of 2013. The Tax Increase Prevention Act of 2014 ( P.L. 113-295 ) extended the exclusion through the end of 2014. The exclusion was extended again through the end of 2016 by Division Q of P.L. 114-113 --the Protecting Americans from Tax Hikes Act (or "PATH" Act). Most recently, the Bipartisan Budget Act of 2018 ( P.L. 115-123 ) retroactively extended the exclusion through the end of 2017. The extension also allowed for debt discharged after 2017 to be excluded from income if the taxpayer had entered into a binding written agreement before January 1, 2018. In order to evaluate the policy of including discharged debt as income, it is helpful to understand why it exists. According to economic theory, one way of defining income is as the change (over the period in question) in a person's net worth--that is, the change in the value of the person's assets minus the change in their liabilities. By this definition, a forgiven loan is income: a canceled debt reduces a taxpayer's liabilities, and thus increases net worth. In the past, tax law has generally adhered to this concept by providing that if the obligation to repay the lender is forgiven, the amount of loan proceeds that is forgiven is reportable income subject to tax. This portion of the report provides analysis of the issues associated with the tax treatment of canceled mortgage debt income. In some instances, lenders may restructure or rearrange debt, cancel some debt, and allow the homeowner to retain ownership of the home. Then, all other things being equal, the borrower's net worth has increased, as liabilities have declined and assets have remained unchanged. Alternatively, homeowners may experience debt cancellation while losing their home, through foreclosure or as a result of voluntarily deeding the property back to the lender. The homeowner no longer has the asset and, to the extent the asset value exceeded liabilities, may be worse off as a result of declining net worth. Additionally, he or she may realize gains or losses, which may make the taxpayer better or worse off as well. If the taxpayer is not able to exclude the COD income, then the tax consequences of the COD income, assuming equal amounts of canceled debt, are the same regardless of whether the home is retained or lost. An illustration is shown in Table 1 . Assuming residential debt of $200,000, a loan restructuring could occur, after which the homeowner owes $180,000 and the lender has agreed to cancel the remaining amount. The discharged debt, $20,000, is income subject to tax if no exclusion applies (e.g., the taxpayer is not insolvent)--if a rate of 28% is assumed, the tax liability is $5,600. Alternatively, the home could have been sold as a result of foreclosure with a sales price of $180,000 along with a lender agreement to cancel the remaining debt. The $20,000 discharge is income and, assuming no exclusion applies and the same tax rate, generates the same tax liability. This is in addition to any taxes the taxpayer may owe on the gain from the sale of the house. On the other hand, if the taxpayer is able to exclude the COD income, as is temporarily allowed in certain circumstances, then the $20,000 discharge is not included in gross income and the taxpayer does not owe the $5,600 tax liability. As previously mentioned, current law stipulates that the excluded COD income be accounted for through reducing the basis in the residence. The impact of such basis adjustment could differ, depending on whether the home is retained or lost, if the taxpayer owes taxes when the house is disposed. A taxpayer who retains the house and sells a later year, while accounting for the excluded COD income through basis adjustment, defers taxes owed on the disposition until the year of sale. In contrast, the tax consequences would depend on the timing of the basis adjustment for a taxpayer that loses a home. If basis is reduced in the year following discharge, as under IRC Section 1017, then the excluded COD income could not be accounted for because the taxpayer had already disposed of the home. If basis were required to be reduced earlier (e.g., at the time of discharge), then the excluded COD income would be accounted for through basis adjustment and the taxpayer would be worse off than a similarly situated taxpayer who had retained the house and was able to defer taxes until the year of sale. An exclusion of certain types of income can result in individuals with identical incomes paying different amounts of tax. A standard of fairness frequently invoked by public finance analysts in evaluating tax policy is "horizontal equity"--a standard that is met when similarly situated tax units pay the same amount of tax. Like other exclusions, excluding debt forgiveness, a unique type of income, violates the standard of horizontal equity. An exclusion of income can also reduce the tax system's progressivity--in other words, likely favor upper-income individuals. This is likely to occur because an exclusion of a given amount is more valuable to persons with higher marginal tax rates. This effect is magnified if homeownership is more concentrated among upper-income individuals. At this point, an example may be useful for illustrating the effect income tax exclusions can have on the tax system's progressivity. Consider two individual homeowners, both of whom incur $20,000 in COD income. The tax benefit differs when the taxpayers are in different tax brackets. The value of the exclusion for a homeowner with lower income, who may be in the 15% income tax bracket, is $3,000, while the value to another homeowner, with higher income and thus in the higher 28% bracket, is $5,600. The higher-income taxpayer, with presumably greater ability to pay taxes, receives a greater tax benefit than the lower-income taxpayer. Congress has provided an exclusion for COD income several times in the past, though the economic and political circumstances for relief were not the same in each case. For example, in 1986 and again in 1993, relief was provided for commercial property owners and farmers, and in 2005, for victims of Hurricane Katrina. The residential housing crisis of 2007 and subsequent recession initiated the most recent legislative action. Lenders report canceled debt income to the IRS on Form 1099-C. A copy is also sent to the borrower, who reports the amount as income. Form 1099-C is used to report all types of canceled debt, not just residential. As shown in Table 2 , the number of 1099-C forms filed and the amount of canceled debt rose during and following the financial crisis. Canceled debt peaked in 2011 at $13.8 billion. The most recent data available show that the amount of canceled debt has fallen 50% from its peak, but still remains elevated relative to the start of the financial crisis, suggesting that some taxpayers are still experiencing financial distress. Unfortunately, the data do not allow for specific conclusions to be drawn about mortgage-related debt. The changes enacted by P.L. 110-142 and then extended by P.L. 110-343 , P.L. 112-240 , P.L. 113-295 , P.L. 114-113 , and P.L. 115-123 are temporary and are scheduled to expire at the end of 2017. Congress may choose to allow the latest extension to expire, thus subjecting canceled mortgage debt income to its traditional tax treatment after 2017. If this were to happen, canceled debt income would be subject to taxation unless the taxpayer meets a qualified exception (e.g., the taxpayer is insolvent). If the exclusion on canceled debt income were to expire, improving awareness about the existing exclusions for canceled debt, such as for insolvency or bankruptcy, may be an option to pursue. Congress may choose to extend the exclusion of canceled debt income again, either temporarily or permanently, possibly with some modifications. Which modifications, if any, are enacted will depend on the goal of policymakers. One consideration for Congress is whether the exclusion provision should be temporary or permanent. Some argue that housing market conditions have improved significantly since conditions bottomed, and therefore warrant a temporary solution for those still feeling the lingering effects of the crash. A temporary exclusion of canceled debt income would appear to be consistent with a policy of minimizing adverse consequences associated with loan renegotiations in the short term. It could also be argued that the temporary exclusion of residential COD income is preferable because owner-occupied housing is already heavily subsidized even without a COD exclusion. Three principal tax provisions for owner-occupied housing currently exist in the tax code: the deduction for mortgage interest, the exclusion of gain on the sales of homes, and the deduction of state and local real estate taxes. When combined these three provisions result in over $125 billion in reduced federal revenue annually. Some economists feel that this preferential tax treatment encourages households to overinvest in housing and less in business investments that might contribute more to increasing the nation's productivity and output. On the other hand, some analysts might argue that the provision should be permanent. A case could be made that a temporary provision is unfair because there is no difference between an individual experiencing canceled debt income in 2010, when foreclosure rates were relatively high compared to three or four years from now, when foreclosure rates may be lower. If the intent is to minimize hardship when taxpayers experience distress, then making the provision permanent would seem consistent with that objective. Several options are possible for determining in what situations canceled mortgage debt income may be excluded from taxation. The broadest modification would exclude all canceled residential debt from income. Currently, only debt associated with the primary (or principal) residence of a taxpayer may be excluded and not vacation homes or investment property. Some policy analysts have suggested disallowing second liens as qualified residential debt. Second liens are not directly ineligible for the exclusion, although currently, qualified debt is restricted to include debt incurred in acquiring, constructing, or substantially improving the taxpayer's principal residence. For some individuals, second liens may be home equity lines of credit; for others, second liens may be debt incurred as part of the purchase of the home. To the extent that home equity lines of credit are used to enhance the home and make capital improvements, it may be consistent with stated policy goals to include this debt as eligible for the exclusion. Yet, home equity lines of credit can also be used to finance consumption, such as vacations or paying off other debt. It may not be consistent with the stated policy goals, some might argue, to include this type of debt in the exclusion. Congress may also wish to consider changing the limit on the amount of canceled debt that can be excluded from income. P.L. 110-142 imposed a limit of $2 million ($1 million if married filing separate returns). Increasing the limit would likely increase revenue loss associated with the exclusion, while decreasing the limit would have the opposite effect. Decreasing the exclusion limit might also reduce the benefit to upper-income taxpayers. Policymakers could modify homeowner eligibility requirements based on ownership tenure or income. The exclusion for canceled debt income could be limited to homeowners who meet certain ownership and/or use tests similar to other housing-related tax provisions. For example, a homeowner must meet both an ownership and use test in order to claim the exclusion for gain on owner-occupied housing that is available under IRC Section 121. The ownership test requires the taxpayer to have owned the house for two of the last five years, while the use test requires the owner to have lived in the house for at least two years out of the last five years. Limiting the exclusion of capital gains in this manner was designed to minimize the possibility that investors, rather than owner-occupants, would exclude capital gains from taxation. If an ownership and/or use test were applied to an exclusion of COD income, the number of tax filers eligible to claim the exclusion might be reduced. This reduction in filers may result in lower revenue loss. This policy option would add complexity to the reporting and filing processes and thus the tax code. In addition, it could be argued that tenure is not relevant to the stated policy goals of mortgage debt cancellation. Some policymakers have suggested that foreclosure assistance be provided only to households with low and moderate incomes. As with other housing tax incentives, such as the mortgage revenue bond program and the first-time homebuyer tax credit for District of Columbia residents, income levels could be capped and the exclusion made unavailable to those households with income above the ceiling. It would seem that income and foreclosure would be highly correlated because lower- income taxpayers may be more financially constrained than higher-income taxpayers. Regardless of whether this is true, it could be argued that household income is not relevant to the stated policy goals for the legislation. This option could reduce the revenue loss associated with the provision, but would add complexity to the administration and tax filing process. As discussed above, current law requires that taxpayers who exclude COD income must "return" some tax benefit by reducing other tax attributes, such as basis in property. Several policy issues arise from this rule. The first is which tax attributes, if any, should be adjusted to account for excluded canceled mortgage debt income. One option is that there be no "attribute reduction" requirement. Alternatively, homeowners could be required to reduce specified tax attributes that include, but are not limited to, basis in the residence (e.g., taxpayers would be able to reduce basis in property other than the home subject to the discharged mortgage). A third option would be to require basis reduction in the taxpayer's residence. All taxpayers would benefit from the first option by not accounting for the excluded COD income. Taxpayer preference between the second option and the third option would depend on his or her circumstances (e.g., whether the taxpayer has basis in other property that would have to be reduced in the event of insufficient basis in the residence). The temporary exclusion of COD income enacted by P.L. 110-142 uses the third option--homeowners are required to reduce basis in the principal residence to account for the excluded COD income. Another issue is when tax attributes should be adjusted. If basis is adjusted, one option could be to make the proposal consistent with current law, under which basis adjustment occurs in the year following discharge of the debt. Alternatively, basis adjustment could occur earlier (e.g., at the time of discharge or exclusion). If basis adjustment occurred in the year after discharge, homeowners losing their home at the time of debt cancellation would have already disposed of the property. The requirement that a basis adjustment in the amount of cancelled debt suggests a desire by policymakers for homeowners to account for the benefit of the cancelled debt. Basis adjustment results in the taxation of cancelled debt income to the extent that gain from the disposition of the home is taxable; however, the timing of the basis adjustment may result in different tax consequences for taxpayers who lose their home. The exclusion of COD income may result in differential treatment of taxpayers depending on basis adjustment timing, eligibility for exclusion of gain from the disposition of the residence, and homeownership retention. Policymakers may wish to account for that differential treatment, although doing so may add complexity and administrative cost to the proposal relative to its current state.

A home foreclosure, mortgage default, or mortgage modification can have important tax consequences. As lenders and borrowers work to resolve indebtedness issues, some transactions are resulting in cancellation of debt. Mortgage debt cancellation can occur when lenders restructure loans, reducing principal balances, or sell properties, either in advance, or as a result, of foreclosure proceedings. Historically, if a lender forgives or cancels such debt, tax law has treated it as cancellation of debt (COD) income subject to tax. Exceptions have been available for taxpayers who are insolvent or in bankruptcy, among others--these taxpayers may exclude canceled mortgage debt income under existing law. The Mortgage Forgiveness Debt Relief Act of 2007 (P.L. 110-142) signed into law on December 20, 2007, temporarily excluded qualified COD income. Thus, the act allowed taxpayers who did not qualify for the existing exceptions to exclude COD income. The provision was effective for debt discharged before January 1, 2010. The Emergency Economic Stabilization Act of 2008 (P.L. 110-343) extended the exclusion of COD income to debt discharged before January 1, 2013. The American Taxpayer Relief Act of 2012 (P.L. 112-240) subsequently extended the exclusion through the end of 2013. The Tax Increase Prevention Act of 2014 (P.L. 113-295) extended the exclusion through the end of 2014. The exclusion was extended again through the end of 2016 by Division Q of P.L. 114-113--the Protecting Americans from Tax Hikes Act (or "PATH" Act). Most recently, the Bipartisan Budget Act of 2018 (P.L. 115-123) retroactively extended the exclusion through the end of 2017. The extension also allowed for debt discharged after 2017 to be excluded from income if the taxpayer had entered into a binding written agreement before January 1, 2018. A rationale for excluding canceled mortgage debt income has focused on minimizing hardship for households in distress. Policymakers have expressed concern that households experiencing hardship and that are in danger of losing their home, presumably as a result of financial distress, should not incur an additional hardship by being taxed on canceled debt income. Some analysts have also drawn a connection between minimizing hardship for individuals and consumer spending; reductions in consumer spending, if significant, can lead to recession. As efforts to minimize the rate of foreclosure are being made, lenders are, in some cases, renegotiating loans with borrowers to keep them in the home. For some policymakers, the exclusion of canceled mortgage debt income may be a necessary step to ensure that homeowner retention efforts are not thwarted by tax policy. Opponents of an exclusion for canceled mortgage debt income might argue that the provision would make debt forgiveness more attractive for homeowners, and could encourage homeowners to be less responsible about fulfilling debt obligations. This report will be updated in the event of significant legislative changes.

Pursuant to the United Nations Framework Convention on Climate Change, the United Stateshas published "national inventories of anthropogenic emissions by sources and removals by sinksof all greenhouse gases not controlled by the Montreal Protocol, using comparable methodologies... agreed upon by the Conference of the Parties." (11) (See Table 1 .) Table 1. U.S. Greenhouse Gas Emissions (MMTCE),1990-2001 Source: Environmental Protection Agency, Inventory of U.S. Greenhouse Gas Emissions and Sinks: 1990-2001 (April 2003), EPA 430R03004. (Datafor 1991-1994 provided by EPA.) Following international convention, EPA presents the data in teragrams ofCO 2 equivalent; CRS has converted thefigures to million metric tons of carbon equivalent (MMTCE), a metric that is more familiar to most U.S.policymakers. a Land-use changes and forestry sinks that sequester carbon; included in net emissions total only. The Environmental Protection Agency (EPA) publishes the official emissions data annually. (12) The United States also from timeto time reports on emissions andexplains its climate change programs in the Climate Action Report (CAR) to theUnited Nations; the third CAR was published in 2002. (13) The U.S. baselines for the UNFCCC and the Kyoto Protocol are shown in Table 2 . For the UNFCCC commitment, the baseline is 1990 emissions, or 1,675MMTCE; if the United States had acceded to the Kyoto targets, the baseline wouldhave been 1,676 MMTCE, a negligible difference. By definition, sinks are not included in calculating the baselines. Table 2. U.S. Baseline Year Greenhouse Gas Emissions Source: EPA, Inventory of U.S. Greenhouse Gas Emissions and Sinks: 1990 - 2001) April 2003, EPA 430R03004. The emissions baselines shown in Table 2 are not immutable. Each annual report includes updated estimates based on methodological and data revisions,although such changes are usually small. Revisions are discussed at some length ineach report. The criteria for calculating emissions agreed upon by the Conference ofParties hinge on both current technical knowledge and policy judgments. Newtechnical information can change factors, for example concerning calculation ofgreenhouse gas equivalents; and policy judgments can be adjusted, for exampleconcerning the time frame for calculating effects. In addition, a few technical issuesremain unresolved, for example in assigning emissions from fuels burned ininternational travel. However, any changes tend to be modest, seldom affecting totalsmuch more than plus or minus 1%, except for sequestration figures, which have beensubject to larger changes. (14) Besides actual quantities of emissions, an alternative measure of a nation's contribution to global warming is "greenhouse gas intensity of the economy" -- thatis, emissions per unit of gross domestic product (GDP). In effect, this measurefocuses on the efficiency of the economy in terms of greenhouse gas emissions: themore efficient, the fewer emissions per dollar of economic output and thus the lowerthe "greenhouse gas intensity." For the United States, greenhouse gas intensity hasbeen declining since at least the 1980s; for the 1990s, the decline in intensity wasabout 10%, based on net emissions (15) (see Table 3 ). Projecting greenhouse gas emissions involves modeling the nation's economicgrowth and activity, with special attention to variables affecting fossil fuelcombustion. The modeling also depends on assumptions about energy policydirections. If reducing emissions becomes a goal, then projections become subject to the outcome of unresolved issues in how the emissions reductions goals might bemet. For example, the major source of CO 2 emissions, fossil fuel combustion, is influenced by overall economic activity and growth as well as by energy policydecisions such as development of non-carbon based substitutes, the rate of adoptionof energy efficient technologies, and the retirement rate of nuclear facilities, amongothers. These policy factors are difficult to predict in the absence of a concreteclimate change policy. (16) The climate change planproposed by President Bush inFebruary 2002 provides some new policy directions, but many elements depend oncongressional action (e.g., for funding) or voluntary private sector initiatives, makingprojections of their impact problematic. Table 3. U.S. Greenhouse Gas Intensity (1990-2001) Source: Table 1; Economic Report of the President , February 2003, Table B-2; CRScalculations. The third U.S. Climate Action Report ( CAR 2002 ) projects greenhouse gas emissions at 5-year intervals through 2020. For this report, the projections arefollowed only to 2010 (see Figures 1 and 2 ), because of the difficulties in projectinginto the more distant future. Also, 2010 provides a basis for evaluating a relationshipto the Kyoto Protocol targets. Sources: Historical data (through 2001): EPA, Inventory of U.S. Greenhouse GasEmissions and Sinks: 1990 - 2001 , April 2003, EPA 430R03004, pp.ES-2 - ES-4. Projections (to 2010): U.S. Department of State, Climate Action Report 2002 , May 2002. [Data converted to MMTCE by CRS.] Sources: Historical data (through 2001): EPA, Inventory of U.S. Greenhouse GasEmissions and Sinks: 1990 - 2001 , April 2003, EPA 430R03004, pp.ES-2 - ES-4. Projections (to 2010): U.S. Department of State, Climate Action Report 2002 , May 2002. [Data converted to MMTCE by CRS.] The CAR 2002 estimate for aggregate gross greenhouse emissions (17) in 2010 is 2,213MMTCE (see Figure 3 ). The President's 2002 initiative to reduce greenhouse gas intensityproposes a series of policy initiatives that it estimates "will achieve 100 million tons ofreduced emissions in 2012." (18) Extrapolatingbetween the CAR 2002 projections from 2010to 2015 (a 1.9% annual growth rate), the 2012 projected emission level would be 2,298MMTCE. The President's initiative suggesting a decline in emissions of 100 million tonsin 2012 would reduce this to 2,198 MMTCE, representing a reduction of about 4.4% from"business as usual" gross greenhouse emissions in that year. In addition, largely separatefrom federal activities, a number of state and local governmental initiatives, as well as avariety of private sector activities, are underway to address greenhouse gas emissions. CAR 2002 only makes point estimates, but some sense of the implications of varying assumptions that affect the estimates can be gleaned from examining an alternative sourceof CO 2 emissions data, the Energy Information Agency's (EIA's) Annual Energy Outlook series. (19) (Because of minor differences in datacalculation and presentation, EIA's annualemissions figures differ slightly from EPA's.) The EIA report's projections of CO 2 emissions include sensitivity analyses to various changes in assumptions, and since CO 2 from fuel combustion accounts for about 80% of U.S.greenhouse gas emissions, the analysis is a reasonable test of the projections. Theassumptions EIA examines include economic growth, technological innovation, oil prices,electricity demand, and others. The first two, economic growth and technologicalinnovation, have the greatest effect on variance in projections of CO 2 emissions (see Table4 ). For 2010, compared to EIA's "reference case" (which is equivalent to a "business asusual" case), low economic growth would reduce projected emissions by about 2%, (20) whilehigh economic growth would increase projected emissions by about 3%. Compared to thereference case that assumes anticipated technological developments, static technology wouldresult in emissions rising about 2%, while a "high-technology" case is projected to reduceemissions about 2%. The point reference case -- CAR's point estimate -- effectivelyassumes the several variances affecting emissions cancel out. But if all the variancesincreasing emissions prove true and cumulative, then projected emissions for 2010 could be5% or more higher than the point estimate; conversely, if all the variances decreasingemissions prove true and cumulative, emissions could be 5% or more lower. Sources: Historical data (through 2001): EPA, Inventory of U.S. Greenhouse GasEmissions and Sinks: 1990 - 2001 , April 2003, EPA 430R03004, pp.ES-2 - ES-4. Projections (to 2010): U.S. Department of State, Climate Action Report 2002 , May 2002. [Data converted to MMTCE by CRS.] Upperand lower bound equal + 5% and - 5%, as discussed in text. President's initiative is from documents on theAdministration plan at http://www.whitehouse.gov/news/releases/2002/02/climatechange.html . Table 4. Impact of Economic Assumptions on Projections of CO2Emissions Source: EIA, Annual Energy Outlook 2003 (January 2003) DOE/EIA-0383(2003), pp. 174,218. Some studies suggest that even greater variance in projections is possible -- for example, that new energy-efficient technologies could be deployed more quickly thangenerally assumed if appropriate policies were instituted. A November 2000 DOE study,commonly called the "New 5-Lab Study," shows that energy efficiency gains in thetransportation, industry, commercial, and residential sectors could reduce emissions from the"business as usual" scenario. (21) The "business asusual" scenario in this study is very similarto EIA's reference case, though it projects somewhat smaller emissions in 2010 (1,769MMTCE from fossil fuel combustion, compared to EIA's most recent projection of 1,800). The study compares "moderate" and "advanced" scenarios "that are defined by policies thatare consistent with increasing levels of public commitment and political resolve to solvingthe nation's energy-related challenges." Policies examined include "fiscal incentives,voluntary programs, regulations, and research and development." (22) Under the "moderate scenario," energy efficiency is improved through such policies as expanded labeling, new efficiency standards, tax credits, and cost-shared R&D; renewableenergy grows more rapidly than in the "business as usual" scenario, and a higher proportionof nuclear power is retained. Under the "advanced scenario," which has more aggressivedemand- and supply-side policies and a doubling of R&D, a federally sponsored carbontrading system is announced in 2002 and implemented in 2005 with a clearing equilibriumprice of $50 per ton of carbon. (23) The results ofthis analysis are shown in Table 5 . Table 5. Impact of Technology/Efficiency Assumptions on Projectionsof CO2 Emissions Source: DOE, Interlaboratory Working Group, Scenarios for a Clean Energy Future ,ORNL/CON-476 and LBNL-44029 (Oak Ridge, TN: Oak Ridge National Laboratory;Berkeley, CA: Lawrence Berkeley National Laboratory, 2000), Table 1.8, p. 1.18. This "New 5-Lab Study" thus suggests that if specified policies were adopted, emissions could be considerably lower than even EIA's high-technology scenario indicates, by as muchas 17% compared to EIA's high-technology reduction in emissions of about 2%. EPA andthe Department of Energy (DOE) have underway a number of programs to foster thedevelopment and deployment of energy-efficient technologies. (24) The President's greenhouse gas intensity reduction initiative is a new variable affecting projections. It would have the effect of reducing anticipated emissions below "business asusual" levels in the future (see Figure 3 ); however, the initiative does not reflect the levelof aggressiveness assumed by the "New 5-Lab Study" for policy interventions to achieve its"advanced scenario" for rapid penetration of energy-efficient technologies. Under the UNFCCC, the United States committed to the voluntary goal of holdinggreenhouse gas emissions at the end of the 1990s to their 1990 levels. If the United Stateshad met this goal, its greenhouse gas emissions for 2000 would have been 1,675 MMTCE. However, U.S. emissions in 2000 were 1,921 MMTCE (not counting sinks). These figuresindicate that in 2000, the nation was exceeding its UNFCCC greenhouse gas emissionscommitment by 246 MMTCE, or nearly 15%. If the United States had acceded to the Kyoto Protocol, its greenhouse gases emissions target for the period 2008-2012 would have been 5 times 93% of the 1,676 MMTCEbaseline, or 1,559 MMTCE on average per year for the period. This hypothetical goal wouldimply reductions equal to the difference between the goal and what would be "business asusual emissions" for the period 2008-2012. Based on the CAR projection that emissions willbe 2,213 MMTCE in 2010, the average annual reduction that would be necessary for theUnited States to meet the Kyoto target of 1,559 MMTCE per year for 2008-2012 would be654 MMTCE per year, or about 30% below the estimated level of "business as usual"emissions. Higher than base case economic growth or lower penetration of energy-efficienttechnologies would mean that emissions would be even higher (and reductions necessary tomeet a goal like Kyoto greater). Slower economic growth, or faster penetration ofenergy-efficient technologies as suggested by the 5-Lab Study, would decrease emissions(and hence reductions to meet a goal). The President's greenhouse gas initiative has the goal of reducing, through voluntary activities, the intensity of net greenhouse gas emissions per unit of economic activity by 18%over the next 10 years; this compares to a projected "business as usual" decline in intensityof 14% for the period -- compared to a decline during the 1990s of about 10% (see Table3 ). According to the White House announcement, this goal means that the current (2002)intensity of 183 metric tons of carbon emissions per million dollars of GDP would fall to 151MMTCE per million dollars of GDP in 2012 (see Figure 4 ). (25) At the anticipated increasedrate of intensity decline, total emissions would decline 100 MMTCE below "business asusual" emissions (although the absolute amount of emissions would continue to rise). It istoo early to assess progress toward the Administration's goal of diminishing greenhouse gasintensity. Source: Global Climate Change Policy Book http://yosemite.epa.gov/oar/globalwarming.nsf/UniqueKeyLookup/SHSU5BNMAJ/$File/bush_gccp_021402.pdf These projected emissions levels (and any implied reductions) are gross estimates and do not take sinks into account (except for the intensity projection). As previously noted, thebaseline could be revised, at least slightly. More important, such projections depend onassumptions about economic trends as well as about policy actions at the local, domestic, andinternational levels. However, whatever the assumptions, the trend in total emissionsexperienced over the past decade and projected for the next decade is clearly upward, whilethe UNFCCC goal was for stabilization and the Kyoto Protocol calls for emissions levelsof developed nations to decline. If one is concerned about assessing the implications of possible reduction requirementsin the future, two further factors must be considered. One is sequestration, which removesCO 2 from the atmosphere, thereby reducing gross emissions. The second is a series ofproposed trading mechanisms that could allow a country to take credit for reductions itsponsors in other countries. The United States was a strong supporter of including both thesevariables in the Kyoto Protocol. Sequestration could directly diminish a country's reductionrequirement; trading does not change a reduction requirement, but it could affect costs andwho would actually achieve the reductions. Carbon Sequestration. Atmospheric greenhouse gas levels are affected not only by emissions, but also by carbon sinks --processes that remove and sequester carbon from the atmosphere. Activities that affectsequestration include farming and forestry practices. For example, a positive net growth oftrees removes carbon from the atmosphere; clearing forests typically releases carbon. Table1 , "U.S. Greenhouse Gas Emissions, 1990 -2001," includes figures for carbon sequestrationfrom land-use activities and forestry, which are the difference between "total emissions" and"net emissions." The UNFCCC states that signatory nations shall commit to "promote sustainable management, and promote and cooperate in the conservation and enhancement, asappropriate, of sinks and reservoirs of all greenhouse gases ... , including biomass, forestsand oceans as well as other terrestrial, coastal and marine ecosystems" (Article 4(1)(d)). The Kyoto Protocol also would provide that sinks can be taken into account in calculating a nation's emissions and its reduction obligation. "The net changes ingreenhouse gas emissions from sources and removals by sinks resulting from directhuman-induced land-use change and forestry activities, limited to afforestation, reforestation,and deforestation since 1990, measured as verifiable changes in stocks ... shall be used tomeet" the 2008-2012 commitments (Article 3(3)). In general, then, a net increase inhuman-induced carbon sequestration from forestry practices between 1990 and 2008-2012would be subtracted from emissions during the period, thereby reducing the amount of actualemissions that will have to be curtailed. Conversely, net negative sequestration from forestrypractices would be added to the emissions that will have to be reduced. Just how this calculation would be done is not prescribed in the Protocol, and disagreements on how much carbon sequestration could be counted toward a nation'sreduction obligations were debated through several subsequent conferences. In July 2001,the Sixth Conference of Parties in Bonn (COP6) agreed to limits on sequestration activitiesthat could be credited against the Protocol's reduction requirements. Although the UnitedStates chose not to participate in these proceedings, the Conference stated in a footnote (26) thatunder the methodology agreed upon, the United States could take credit for net increases ofsequestration of up to 28 million metric tons per year. Emissions Trading. Emissions trading, strongly supported by the United States in the Kyoto negotiations, derives from the principleof economic efficiency -- that reductions, if necessary, should be achieved at the lowestcost. Trading mechanisms thus are designed to allow low-cost reductions to substitute forhigher-cost ones. The idea is that a country could achieve its reduction goal not only byreducing its domestic emissions, but also by reducing emissions elsewhere. Trading does notactually reduce a nation's reduction requirement, but it does allow it to contract for and tocount reductions elsewhere that are cheaper to achieve than domestic ones. The Kyoto Protocol provides for emissions trading mechanisms (27) that can be used to"supplement" domestic reductions; this offers the possibility that actual domestic greenhousegas reductions achieved by a party to the Kyoto Protocol will be less than the party's actualcommitment. Some portion of the reduction requirement could be shifted elsewhere. TheClinton Administration argued that emission trading would be critical to U.S. compliancewith Kyoto; (28) a Clinton Administration economicanalysis suggested that U.S. compliancecosts would drop from $193 per ton with no international emissions trading to $23 per tonwith global trading. (29) COP6 agreed that therewould be no quantitative limit on the amountof credit a country could receive from trading, but that domestic action must constitute asignificant part of a nation's reduction efforts. (30) With no quantitative limit on trading, anyestimate of actual domestic reduction required to comply with the Kyoto Protocol, or of thecosts involved, remains problematic -- and is moot as long as the United States declines toparticipate in the Kyoto process. The precise numerical projections of greenhouse gas emissions (or of proposedreductions) should be viewed as indicative (see Figure 3 ). They are less accurate than theyappear, given the potential for revisions in data and the uncertainties of projections. But inassessing the status of U.S. greenhouse gas emissions, the trendline for aggregate greenhousegas emissions is clear: for the United States, the overall trend is up. None of the reviewedscenarios using assumptions that diminish emissions -- low economic growth, putting offretirement of nuclear facilities, accelerated fostering of energy-efficient technologies, thePresident's voluntary program to reduce greenhouse gas intensity -- reverses the upwardtrend in aggregate greenhouse gas emissions by 2010. (31) Historical data show that the United States failed to meet its voluntary commitment under the UNFCCC for returning aggregate emissions at the end of the 1990s decade to the1990 level. Any goal to reduce emissions to or below 1990 levels would require thecontinuing upward trend to turn down. Even with the potential for sequestration andemissions trading to reduce domestic reduction efforts, a goal to reverse greenhouse gasemissions trends would represent an extraordinary technical and political challenge for U.S.energy and environmental policy.

This report reviews U.S. emissions of greenhouse gases in the contexts both of domestic policy and of international obligations and proposals. On October 15, 1992, the United States ratified theUnited Nations Framework Convention on Climate Change (UNFCCC), which entered into forceon March 21, 1994. This committed the United States to "national policies" to limit "itsanthropogenic emissions of greenhouse gases," with a voluntary goal of returning "emissions ofcarbon dioxide [CO 2 ] and other greenhouse gases [methane (CH 4 ), nitrous oxide(N 2 O),hydrofluorocarbons (HFCs), perfluorocarbons (PFCs), and sulfur hexafluoride (SF 6 )]" at the "endof the decade" to "their 1990 levels." Subsequently, in the 1997 Kyoto Protocol to the UNFCCC, the United States participated in negotiations that ended with agreement on further reductions that could become legally binding. TheUnited States signed the Kyoto Protocol in 1998, but President Clinton did not send it to the Senatefor advice and consent. President Bush has said that he rejects the Protocol, and former U.S.Environmental Protection Agency Administrator Christine Todd Whitman told reporters that theAdministration would not be pursuing the UNFCCC commitment either. Instead, President Bushhas proposed to shift the nation's climate change program from a goal of reducing emissions per seto a goal of reducing energy intensity -- the amount of greenhouse gases emitted per unit ofeconomic productivity. Under the proposal, the intensity, which has been declining for a numberof years, would decline 18% between 2002 and 2012, as opposed to a 14% projected "business asusual" decline. Meanwhile, the UNFCCC "end of the decade" deadline has passed and U.S. greenhouse gas emissions continue on an upward trend, though with dips in 1991 and in 2001, attributed mostly toeconomic slowdowns. Based on historical data, 2001 emissions were about 13% in excess of theUNFCCC goal. Overall, from 1990 to 2001, U.S. greenhouse gas emissions (weighted by globalwarming potential) have increased an average of about 1.1% per year. Projections suggest that U.S.emissions will continue to rise for at least the next decade. Reversing the upward trend ingreenhouse gas emissions would represent an extraordinary technical and political challenge to U.S.energy and environmental policy. This report will be updated as necessary.

F ollowing a lengthy debate over raising the debt limit, the Budget Control Act of 2011 (BCA; P.L. 112-25 ) was signed into law by President Obama on August 2, 2011. In addition to including a mechanism to increase the debt limit, the BCA contained measures intended to reduce the budget deficit through spending restrictions. Combined, these measures were projected to reduce the deficit by roughly $2 trillion over the FY2012-FY2021 period. The spending reductions in the BCA are achieved mainly through two mechanisms: (1) statutory discretionary spending caps covering 10 years that came into effect in 2012 and (2) a $1.2 trillion automatic spending reduction process (sometimes referred to as the "sequester") covering nine years that was initially scheduled to come into effect on January 2, 2013. Three subsequent pieces of legislation have modified the BCA as enacted. The American Taxpayer Relief Act (ATRA; P.L. 112-240 ) postponed the start of the FY2013 spending reductions, commonly known as the sequester, until March 1, 2013, and canceled the first two months of spending cuts. The Bipartisan Budget Act (BBA 2013; P.L. 113-67 ) raised the caps under the BCA on defense and non-defense discretionary spending in FY2014 and FY2015, and extended BCA mandatory sequestration through FY2023. Finally, the Bipartisan Budget Act of 2015 (BBA 2015; P.L. 114-74 ) raised the discretionary spending caps in FY2016 and FY2017, and further extended mandatory sequestration. This report discusses the effects of the BCA on spending and the deficit, assuming that the automatic spending reductions proceed as scheduled from FY2016 to FY2021 and the discretionary spending caps remain in place. Other CRS reports provide additional analysis of the BCA. The BCA was enacted in response to congressional concern about rapid growth in the federal debt and deficit. The federal budget has been in deficit (spending exceeding revenue) since FY2002, and incurred particularly large deficits from FY2009 to FY2013. Increases in spending on defense, lower tax receipts, and responses to the recent economic downturn all contributed to deficit increases in that time period. In FY2010, spending reached its highest level as a share of GDP since FY1946, while revenues reached their lowest level as a share of GDP since FY1950. As the effects of the recession wane, higher tax revenue and lower levels of spending as a percentage of GDP relative to those fiscal years have resulted in lower budget deficits. In FY2015, the deficit totaled 2.4% of GDP, or 7.4 percentage points below its peak in 2009. The BCA reduces projected spending through two primary mechanisms, discretionary spending caps that began in FY2012 and an automatic spending reduction process that began in FY2013. The BCA placed statutory caps on most discretionary spending from FY2012 through FY2021. The caps essentially limit the amount of spending through the annual appropriations process for that time period, with adjustments permitted for certain purposes. The limits could be adjusted to accommodate (1) changes in concepts and definitions; (2) appropriations designated as emergency requirements; (3) appropriations for Overseas Contingency Operations/Global War on Terrorism (OCO; e.g., for military activities in Afghanistan); (4) appropriations for continuing disability reviews and redeterminations; (5) appropriations for controlling health care fraud and abuse; and (6) appropriations for disaster relief. The last five of the listed adjustments effectively exempt those types of discretionary spending from the statutory caps, reducing the ability of the caps to limit total discretionary spending. The BCA limits adjustments for spending on disability reviews and controlling health care fraud abuse to relatively small amounts and limits adjustments for disaster relief by a formula based on historical levels. Funds classified by Congress and the President as OCO and emergency spending are not limited by the BCA. Cap levels are enforced through a sequestration process (spending cuts that are automatically triggered if cap levels are breached). The sequestration process has not been used to date, as Congress has enacted budgets with spending amounts consistent with the cap levels. The adjustable caps are not placed on specific accounts or even on each of the appropriations bills; instead, they are broad caps on the total amount of discretionary spending. In FY2012 and FY2013, the BCA placed separate caps exist on security and non-security spending. The largest amounts of spending in the non-security category are tied to the Departments of Health and Human Services, Education, and Housing and Urban Development. For FY2014 to FY2021, the BCA institutes separate caps for defense and non-defense spending. Decisions about how these caps will affect specific agencies or programs are made by Congress and the President through the regular appropriations process. Table 1 displays BCA discretionary cap levels, before and after the automatic spending reductions discussed in the next section, as amended by ATRA, BBA 2013, and BBA 2015. Title IV of the BCA established a Joint Select Committee on Deficit Reduction (hereinafter Joint Committee), composed of an equal number of Senators and Representatives, and instructed it to develop a proposal that would reduce the deficit by at least $1.5 trillion over FY2012 to FY2021. To ensure deficit reduction occurred if a Joint Committee bill was not enacted, Section 302 of the BCA established an automatic process to reduce spending. On November 21, 2011, the co-chairs of the Joint Committee announced that they were unable to reach a deficit-reduction agreement before the committee's deadline. As a result, a $1.2 trillion automatic spending reduction process was triggered, beginning in January 2013. Of the $1.2 trillion in deficit reduction, the BCA specified that 18% of the total ($216 billion) be credited to debt service savings that would result from the spending reduction. Therefore, the amount of the reduction in budget authority would equal the remaining 82% of the required deficit reduction total. The amount of the automatic spending reduction under the BCA was spread evenly over the nine years from FY2013 to FY2021 and split evenly between defense (defined as budget function 050) and non-defense spending categories and applied proportionally to discretionary and mandatory programs within each of these categories. The automatic spending restriction would amount to a reduction in budget authority of $109.3 billion each year for nine years, with $54.7 billion of the reduction to be applied to defense and $54.7 billion applied to non-defense programs. ATRA, BBA 2013 and BBA 2015 modified this process, lowering the required reductions in defense and non-defense spending from FY2013 through FY2017. Within the defense and non-defense categories, some programs are exempted from an automatic spending reduction and the cuts to other programs are limited by statute. For example, an automatic spending reduction to Medicare is limited to 2% of total program spending. Although the BCA as enacted made no revisions to the total automatic spending reductions in subsequent years, the amount applied to any given budget account could be recalculated, if the relative size of budget accounts changes or the exempt/nonexempt status of an account changes. For purposes of the automatic reductions, the BCA created new discretionary cap levels for defense and non-defense for the 10-year budget window. The amount of the automatic reduction is then subtracted from the new defense and non-defense cap levels. In FY2013, the automatic spending reduction was carried out through an across-the-board sequester (cancellation) of previously authorized budgetary resources. From FY2014 forward, the automatic spending reduction has been carried out through a sequester for mandatory spending and through reductions in the overall discretionary caps, rather than a sequester, for discretionary spending. The sequester is applied proportionately to all non-exempt accounts, while it is left to future Congresses to determine how to apply the reductions to discretionary accounts within the caps. Cuts to discretionary programs as a result of the automatic spending reduction process would be in addition to the projected savings resulting from the initial discretionary caps in the BCA. The FY2013 sequester reduced non-exempt defense discretionary spending by 7.8% relative to the cap levels, non-defense discretionary spending by 5.0% relative to the cap levels, Medicare by 2% relative to baseline levels (per the statutory limit), and other mandatory spending by 5.1% relative to the baseline levels. For FY2014, a sequester order was issued which reduced mandatory defense spending by 9.8% and mandatory non-defense spending by 7.2%. The sequester order issued in FY2015 reduced mandatory defense and non-defense spending totals by 9.5% and 7.3% respectively. Reductions to Medicare remained capped at 2% in each year, per the statutory limit. To gauge how these reductions compare with overall spending, Figure 1 compares the projected percentage of budgetary resources tied to each major programmatic area to the percentage of budget cuts that that spending category absorbs in FY2015. Total gross budgetary resources for FY2015 are shown in the pie chart on the left side of Figure 1 . Mandatory programs account for roughly two-thirds of FY2015 outlays (excluding net interest payments). The majority of mandatory outlays are attributable to non-defense programs (47% of all non-interest spending). Nearly all of the remaining mandatory expenditures in FY2015 are devoted to Medicare (18% of non-interest spending), with the remaining portion allotted to defense programs (1% of total spending). The remaining 34% percent of total spending is discretionary, and is split almost evenly between defense and non-defense expenditures (17% of total spending each). The pie chart on the right side of Figure 1 shows the percentage share of the spending cuts in FY2015 for each category under the sequester. As most of the spending exempt from reduction falls within the mandatory category, the automatic spending cuts fall most heavily on discretionary programs. In FY2015, discretionary spending is projected to account for 34% of budgetary resources, but receives 84% of the automatic spending reductions. Defense discretionary spending is particularly affected, as the defense spending category would receive 49% of all automatic cuts but accounts for 17% of total gross budgetary resources. In contrast, mandatory programs account for 66% of budgetary resources in FY2013, but would bear 16% of the spending reduction (10% on Medicare and 6% on other mandatory programs). Mandatory spending received disproportionately fewer cuts because much of that spending is exempt from reductions under the BCA. Of the mandatory spending that is eligible for reductions, a significant portion is attributable to Medicare, which is limited to a 2% cut under the BCA. The automatic spending reduction process does not guarantee that a specific deficit or spending level is realized in the future, or protect the deficit saving accomplished through the automatic spending reduction from future legislation. Moreover, the amount of automatic spending reduction does not change if future budget deficits turn out to be larger or smaller than projected at the time the automatic spending reduction is determined, which could occur because of subsequent legislative changes or forecasting errors. Since the enactment of the BCA, its spending reductions have been modified by three pieces of legislation, the American Taxpayer Relief Act of 2012 (ATRA), the Bipartisan Budget Act of 2013 (BBA 2013), and the Bipartisan Budget Act of 2015 (BBA 2015). This legislation lowered the spending reductions required in FY2013 through FY2017. None of these actions modified the provisions of the BCA that affect discretionary spending beyond FY2017, though BBA 2013 and BBA 2015 extended the BCA's mandatory spending sequester through FY2025. The enactment of ATRA postponed the start of the FY2013 spending reductions until March 1, 2013. This reduced the FY2013 spending reductions implemented via this process by $24 billion, to roughly $85.3 billion, equally divided between defense and non-defense ($42.7 billion for each category). Several other minor modifications were also made to the process by which these spending cuts would be calculated. Although ATRA reduced the total spending cuts achieved by the automatic process, the cost of these provisions was offset by other spending reductions and revenue increases. ATRA reduced the BCA's discretionary spending caps by $4 billion in FY2013 and $8 billion in FY2014, which offset roughly half of the total cost. In addition, ATRA contained a provision which raised revenue during the budget window by permitting certain retirement accounts to be transferred to designated Roth accounts without distribution. This was used to offset the remaining cost of the legislation. Passage of the BBA 2013 further amended the budgetary changes under the BCA. BBA 2013 eased the discretionary spending restrictions imposed by the BCA in FY2014 and FY2015 through equivalent increases to the defense and non-defense spending authority in those years. The defense and non-defense discretionary spending caps were each increased by roughly $22 billion in FY2014 and $9 billion in FY2015. As with ATRA, the short-term reduction in spending cuts imposed by BBA was offset by other budgetary changes. Those changes included an extension of the mandatory sequestration process applied by the BCA to FY2022 and FY2023, which was projected to reduce the deficit by a total of $28 billion, and a number of other modifications that produced budgetary savings and did not interfere with the process established by the BCA. The budgetary changes instituted by the BCA were again modified with the passage of BBA 2015. That legislation increased the defense and non-defense discretionary spending caps as enacted by the BCA by $25 billion each in FY2016 and $15 billion each in FY2017. BBA 2015 also extended the automatic direct spending reductions from FY2024 through FY2025, and altered the limits to budget authority adjustment for certain integrity programs from FY2017 to FY2021. Finally, it established nonbinding targets for OCO/GWOT services in FY2016 and FY2017. As with BBA 2013, BBA 2015 also included a number of actions with an effect on the budget, but did not affect BCA restrictions. The BCA as enacted contained over $2 trillion in deficit reduction over 10 years, affecting primarily the discretionary side of the budget. This section evaluates the effect of the Budget Control Act's discretionary caps and automatic spending reduction process (as amended by ATRA and BBA) on total spending levels, and decomposes those changes into their effects on outlays or budget authority, depending on the context. The BCA as amended sets new levels of budget authority, which eventually leads to changes in outlays. The difference between budget authority and outlays is discussed in the following text box. To date, appropriations for four fiscal years, 2012 through 2015, have been provided under the BCA framework (as amended by ATRA and BBA). Table 2 illustrates how discretionary budget authority has been provided within categories subject to the caps and categories that are not limited by the caps. Discretionary budget authority subject to the caps equaled $1,043 billion in FY2012 and FY2013, $1,012 billion in FY2014, and $1,014 billion in FY2015. Total discretionary budget authority has exceeded the caps in all years because, as permitted by the BCA, there has been discretionary budget authority (BA) provided ranging from $87 billion in 2015 to $153 billion in 2013 in categories not subject to the caps. In 2013, a sequester was applied to the adjusted cap level as a result of the BCA's automatic spending cuts, reducing discretionary BA from $1,196 billion to $1,127 billion. Of the spending reductions, $59 billion reduced spending subject to the caps and $9 billion reduced OCO, emergency, and disaster spending. Total discretionary BA was $1,181 billion in 2012, $1,127 billion in 2013, $1,111 billion in 2014, and $1,101 in 2015. For FY2012 to FY2021, discretionary and mandatory spending under the BCA as amended by ATRA, BBA 2013, and BBA2015 is projected to be reduced relative to baseline levels. Relative to a baseline using FY2011 appropriated levels adjusted for inflation, CBO projects that the combination of the BCA's caps and automatic spending reduction process as amended reduced discretionary outlays by $95 billion in FY2013 and $1,459 billion over 10 years, as shown in Table 3 . The dollar amount of reductions to defense discretionary spending are modestly larger than the reductions to non-defense discretionary spending from 2016 to 2021 because of the formula used in the BCA to determine the allocation of the automatic spending reductions. Whether the BCA leads to lower overall discretionary spending than it intended depends on the level of spending outside the caps and which baseline spending level is used for comparison. Spending on disaster relief from 2012 to 2015 was at levels permitted by the BCA and spending on OCO was below 2011 levels. Thus, it could be argued that these categories outside the caps were not used to offset cuts to discretionary spending subject to the caps. By contrast, emergency spending in 2013 and 2015, enacted in the Disaster Relief Appropriations Act of 2013 ( P.L. 113-2 ) and Consolidated and Further Continuing Appropriations Act, 2015 ( P.L. 113-235 ) respectively, can be viewed as allowing overall discretionary spending to be $42 billion higher in 2013 and $5 billion in 2015 than it otherwise would have been. Stated differently, instead of offsetting the supplemental by reducing other discretionary spending under the cap, the supplemental was designated by Congress as emergency to provide spending in addition to the cap amount, in effect through deficit financing. Enacted emergency spending was netted out of the reductions in discretionary spending in Table 3 ; if emergency spending is not netted out, discretionary reductions were $137 billion (the $95 billion reduction plus $42 billion in emergency spending) in FY2013, and $147 billion (the $142 billion reduction plus $5 billion in emergency spending) in FY2015. There was no enacted emergency spending in FY2012 or FY2014. As seen in Table 3 , mandatory spending was cut by $11 billion in FY2013, and is projected to be cut by $182 billion over the FY2013-FY2021 period under the automatic spending reduction process. Subsequent legislation has extended the mandatory spending reduction imposed by the BCA until FY2025, while the discretionary spending restrictions are still scheduled to end in FY2021. Most of the mandatory spending cuts in dollar terms are to Medicare. The amount of the cuts to mandatory spending is lower than those to discretionary spending because much of mandatory spending is exempt from the BCA's automatic cuts and mandatory spending is not subject to caps similar to those implemented for discretionary spending. Separate from the automatic process, the BCA also cuts mandatory spending on student loan programs by $5 billion over 10 years. To understand how the BCA affects spending over time, this section compares the levels and percentage changes in spending under the BCA to historical data. Spending levels over time can be compared using a number of different measures, however (see the text box below). To date, recent policies to reduce the deficit have primarily focused on reducing discretionary spending (spending that is provided and controlled through the appropriations process). This trend pre-dates the BCA. In terms of budget authority, overall discretionary spending declined from $1.264 trillion in FY2010 to $1.221 trillion in FY2011 and to $1.198 trillion in FY2012. These declines are in terms of nominal dollars; the decline would be larger if the figures were adjusted for inflation. In 2011, the decline was mostly the result of a reduction in non-defense discretionary spending, and in 2012 the decline was mostly caused by a reduction in spending on overseas contingency operations (OCO). Table 4 shows the projected levels of discretionary budget authority and annual percentage changes, in real and nominal terms, subject to the BCA caps under the automatic spending reduction process ("trigger"). The levels in the table exclude funding for categories of spending (such as OCO, emergency, and disaster) for which cap adjustments are permitted. Because those categories of spending are effectively exempt from the caps, it is possible that the trend of growth in overall discretionary spending (spending subject to the cap plus exempt spending) could turn out to be higher than growth in discretionary spending subject to the BCA caps in future years, even if there is strict compliance with the caps. Alternatively, future Congresses could decide to appropriate an overall level of discretionary spending below the BCA caps, in which case the growth in actual spending would be lower than the growth in the caps. From FY2011 to FY2015, discretionary budget authority subject to the caps fell in real terms each year. In both nominal and real terms, the largest year-over-year percentage declines in spending over the FY2011 to FY2021 period took place in FY2013, largely as a result of the spending reductions instituted by the BCA. That year, discretionary budget authority subject to the caps fell by 6.5% in nominal terms and 8.0% as a percentage of GDP compared with FY2012 levels. Spending subject to the caps experienced smaller real declines in FY2014 and FY2015, as BBA 2013 increased the caps on discretionary budget authority in those years. Discretionary spending is forecasted to rise by 5.1% on a nominal basis and 3.7% in real terms in FY2016, and fall by 1.4% in real terms (though rise by 0.5% on nominal terms) in FY2017. The spending patterns in these years deviate from the trend largely due to the agreement to raise the caps on discretionary spending made by BBA 2015. BBA 2015 made no changes to FY2018 discretionary spending limits, resulting in a nominal and real decline in discretionary budget authority as the more restrictive limits designed by the BCA take effect. Discretionary spending is then forecasted to undertake modest real increases from FY2019 through FY2021, the last years that discretionary spending is affected by the BCA as amended. Since the BCA caps nominal spending, whether real spending increases or decreases from FY2016 to FY2021 will be highly sensitive to the inflation rate. For example, if inflation turns out to be slightly higher than projected, spending would decrease in real terms from FY2019 to FY2021 instead of the decline shown in Table 4 . Although data on spending subject to the caps is only available since FY1976, overall nominal discretionary budget authority fell in only nine other years from FY1976 through FY2011, and by less than 5% in each of those years except FY2010. The FY2013 decline was larger than in any other year except FY2010. The decline in spending subject to the caps in FY2013 follows a nominal decline in FY2011 and a nominal increase in FY2012 that was less than the rate of inflation (resulting in a decline in real terms). In FY2015 real discretionary spending again declined, and was at its lowest value since FY2007. To compare projections of discretionary spending under the BCA to historical trends, adjustments need to be made for types of discretionary spending not subject to the BCA caps, such as emergency spending, disaster spending, and OCO. Table 5 makes this adjustment by excluding funding for OCO and disaster spending for FY2001 to FY2011. Emergency spending was not removed from spending totals. Table 5 compares growth in discretionary spending (adjusted to remove OCO and disaster spending) before and after the changes made by the BCA, ATRA, and BBA took effect. In real terms, discretionary spending subject to the caps grew at an average annual rate of 2.9% from FY2001 through FY2011. Growth in real defense discretionary spending (3.5% on average) was stronger than that of non-defense discretionary spending (2.3% on average) in that time period. From FY2012 to FY2015, the combined effect of the BCA, ATRA, and BBA cause spending to decline by an average of 2.5% annually, with a fairly evenly split between defense (2.8% average decline) and non-defense (2.2% average decline) discretionary reductions. The difference between the first and third columns of Table 5 demonstrates the potential for overall discretionary spending growth to exceed the growth rate desired under the caps. In the 2001-2011 period, spending primarily related to Hurricane Katrina and operations in Iraq and Afghanistan caused OCO and disaster spending growth to exceed the growth rate of other discretionary spending. From 2012 to 2015, the trend has reversed, with total real discretionary spending declining by an annual average of 4.0%. Discretionary spending subject to the caps and outside of the caps (mainly OCO) both declined in those years. Figure 2 shows levels of total discretionary and mandatory spending as a percentage of GDP between FY1962 and FY2025. The levels between FY2016 and FY2025 are projected and assume that the discretionary caps and automatic spending cuts go into effect as scheduled under current law. As noted above, to compare historical data to projections, adjustments must be made for categories of discretionary spending exempt from the BCA caps. Discretionary spending over the FY1962-FY2011 period averaged 9.1% of GDP. As Figure 2 shows, it rose relative to GDP from 1999 to 2011, but remained below the levels prevalent from FY1962 to FY1987. In 2018, discretionary spending under the baseline would reach its lowest share of GDP since data were first available, at 5.9% of GDP, and would continue to decline thereafter. By FY2025, discretionary spending is projected to reach 5.1% of GDP, or nearly 4 percentage points below the historical average. CBO's baseline projection assumes that defense discretionary spending and non-defense discretionary spending will reach their lowest share of GDP in this time frame in FY2025. Before the enactment of the BCA, there were two periods of sustained decline in discretionary spending as a percentage of GDP since 1962, occurring in FY1969-FY1974 and FY1987-FY1999, respectively. In both cases, the decline was driven mainly by a reduction in defense spending as a percentage of GDP, in the former case because of a wind-down of operations in Vietnam and in the latter case by the "peace dividend" associated with the end of the Cold War. Non-defense discretionary spending fell as a percentage of GDP only in the second half of the latter period. In both cases, the decline in spending began from a higher starting point than today. Mandatory spending under the BCA, by contrast, is projected to continue to grow in nominal terms and relative to GDP over the next 10 years. It is projected to increase from $2.0 trillion (12.9% of GDP) in FY2015 to $3.9 trillion (14.1% of GDP) in FY2021. This growth is primarily due to the projection that elderly entitlement spending (notably, Social Security and Medicare) will grow more quickly than GDP over the next 10 years. The BCA has a minimal effect on this trend--it reduces mandatory spending under the automatic spending reduction process by one-tenth of 1% of GDP annually. Social Security is exempt from the BCA's automatic process, and most Medicare payments are reduced by no more than 2% relative to baseline levels. As can be seen in Figure 2 , the increased level in mandatory spending as a percentage of GDP that began in 2009 persisted through the enactment of the BCA and continues through the current budget window. The cuts to Medicare under the BCA relative to current policy are not projected to prevent Medicare spending from growing in real terms or relative to GDP over the 10-year budget window. Total spending is composed of discretionary spending, mandatory spending, and net interest on the federal debt. From FY2019 to FY2021, the growth in mandatory spending and net interest is greater than the decline in discretionary spending, resulting in a projected rise in total spending as a percentage of GDP. In FY2021, total spending is projected to equal 21.3% of GDP. This is well above the historical average; from FY1947 to FY2011, total outlays averaged 19.7% of GDP. As discussed earlier, the BCA was originally projected to reduce the deficit by roughly $1.9 trillion between FY2012 and FY2021, ignoring subsequent modifications. These figures include both the direct effect of lower spending on deficits and the interest savings stemming from the lower deficits resulting from lower spending. However, since the law has been enacted, various legislative provisions have resulted in increases in the deficit, relative to current law, which "offset" the deficit reduction enacted in the BCA. Table 6 below illustrates the changes to the current law baseline as a result of legislation enacted since August 2011 (the month of enactment for the BCA). The legislation that increased the deficit the most relative to current law was ATRA. ATRA made various changes to the tax code and several spending programs, including modification of the provisions of the BCA as it related to the FY2013 sequester as discussed earlier. As a result of ATRA, CBO projected the deficit would increase by more than $3 trillion between FY2013 and FY2021. (The total increase in the deficit from the legislation was estimated at $4 trillion over the FY2013-FY2022 period. Compared with a current policy baseline that assumes expiring provisions will be extended, however, ATRA reduced the deficit.) Other legislation had much smaller effects on both spending and revenue levels. Relative to CBO's current law baseline, the cumulative effect of legislative action from August 2011 to August 2015 increased the projected deficit over the FY2012-FY2021 (or the period during which all components of the BCA are in place) period by $1.483 trillion. If the deficit reduction provisions of the BCA are not included, the legislative action during this period increased the projected budget deficit by $3.408 trillion. As this discussion illustrates, individual policy changes cannot be taken in isolation. The BCA sought to match deficit reduction provisions with a multi-step increase in the debt limit, although in isolation BCA deficit reductions would not prevent the need for future debt limit increases. In any case, matching deficit reduction with debt limit increases is an intermediate goal, but not an ultimate goal of fiscal policy. Two other potential goals of deficit reduction are to balance the budget or to place the deficit on a sustainable path. Economists believe that the budget will eventually need to be placed on a sustainable path because debt cannot rise faster than income (GDP) indefinitely. Under the most recent CBO baseline, the budget deficit falls from 2.8% of GDP in FY2014 to 2.4% of GDP in FY2015 to a low of 2.1% of GDP in FY2017. After that, it begins to rise once again, reaching 3.7% of GDP by FY2025, though it falls slightly in 2023 and 2024. Over the same period, the debt held by the public is projected to rise from 74.0% of GDP to 76.9% of GDP in FY2025, though as with the deficit the debt does not increase in all years during this period. Beyond the 10-year budget window, projected budget deficits become much larger relative to GDP, primarily due to the assumption that health care costs will continue to grow faster than GDP. Moreover, these deficit and debt projections assume that current law will remain in place. If Congress and the President enact subsequent legislation to decrease revenue levels or increase spending, these projections could change. Congress also has the option of offsetting discretionary spending increases with reductions in mandatory budget authority that were unlikely to be realized as outlays under current law. Such reductions, which are commonly referred to as CHIMPS, may decrease the impact of such legislation on net deficits under the present scorekeeping rules, but have no effect on the actual mandatory spending if such budget authority would not have been exercised. Besides new initiatives, Congress and the President have routinely increased the deficit by temporarily extending over 50 expiring tax provisions in recent years. If these policies continue to be extended, CBO' projects that the deficit will increase by nearly an additional $1 trillion over the FY2016-FY2025 period, with additional deficit increases beyond FY2025.

Following a lengthy debate over raising the debt limit, the Budget Control Act of 2011 (BCA; P.L. 112-25) was signed into law by President Obama on August 2, 2011. In addition to including a mechanism to increase the debt limit, the BCA contained a variety of measures intended to reduce the budget deficit through spending restrictions. There are two main components to the spending reductions in the BCA: (1) discretionary spending caps that came into effect in FY2012 and (2) a $1.2 trillion automatic spending reduction process that was initially scheduled to come into effect on January 2, 2013. Combined, these measures were projected to reduce the deficit by roughly $2 trillion over the FY2012-FY2021 period. The American Taxpayer Relief Act of 2012 (ATRA; P.L. 112-240) reduced and postponed the start of the FY2013 spending reductions, commonly known as the sequester, until March 1, 2013. The Bipartisan Budget Act of 2013 (BBA 2013; P.L. 113-67) increased the discretionary spending caps in FY2014 and FY2015 and extended mandatory sequestration through FY2023. The Bipartisan Budget Act of 2015 (BBA 2015; P.L. 114-74) raised the discretionary spending caps in FY2016 and FY2017, and further extended mandatory sequestration. Congress has debated whether to maintain scheduled spending cuts in future years. To inform that debate, this report discusses the effects of the BCA as amended on spending and the deficit, assuming that the discretionary spending caps remain in place. From FY2012 to FY2021, the BCA is projected to cut discretionary spending by $1.5 trillion. Discretionary spending subject to the caps was 4.3% lower on a nominal basis and 9.7% lower on a real (inflation-adjusted) basis than in FY2011, the year before BCA discretionary caps were established. Real discretionary spending subject to the caps is projected to remain relatively constant from FY2016 to FY2021, with real growth projected to be 1.0% in that time period. Total discretionary spending (which includes discretionary outlays not subject to the BCA caps) under the BCA was 13.7% lower on a nominal basis and 18.6% lower on a real basis in FY2015 than it was in FY2011. The current budget outlook projects that real spending in FY2021 will be 3.9% lower than that in FY2015. The BCA imposes smaller reductions to mandatory outlays. Mandatory spending under the BCA is cut by less than $0.2 trillion from FY2012 to FY2021, with most non-Medicare mandatory spending exempted from spending cuts. Mandatory spending accounted for 66% of spending in FY2015, but received only 16% of the sequester cuts. Total mandatory spending from FY2011 to FY2015 increased by 13.4% on a nominal basis and 7.0% in real terms. The rise in mandatory spending is projected to accelerate in the latest budget outlook, as mandatory spending in FY2021 is forecasted to be 49.9% higher in FY2021 (67.7% on a real basis) than it was in FY2015. Under the BCA, discretionary spending is projected to average 6.4% of GDP from FY2012 to FY2021, a notable decline from the 9.1% of GDP average from FY1962 to FY2011. From FY2018 on, overall discretionary spending would be below its lowest share of GDP since data were first collected in 1962 (6.0% of GDP), assuming current levels of uncapped discretionary spending. However, because projected growth in mandatory spending, total federal spending from FY2012 to FY2021 is projected to average 21.0% of GDP, which is lower than its peak of 24.4% in FY2012 but above the post-World War II average. Although the BCA reduced projected deficits, its savings has been mitigated by subsequent legislation that has increased current law deficits since the BCA was enacted. Altogether, legislative changes since August 2011 have increased the deficit by $1.5 trillion from FY2012 to FY2021. As a result, the federal debt is projected to continue to increase relative to GDP in future years.

The President is responsible for appointing individuals to certain positions in the federal government. In some instances, the President makes these appointments using authorities granted to the President alone. Other appointments, generally referred to with the abbreviation PAS, are made by the President with the advice and consent of the Senate via the nomination and confirmation process. This report identifies, for the 113 th Congress, all nominations submitted to the Senate for full-time positions on 34 regulatory and other collegial boards and commissions. This report includes information on the leadership structure of each of these 34 boards and commissions as well as a pair of tables presenting information on each body's membership and appointment activity as of the end of the 113 th Congress. The profiles discuss the statutory requirements for the appointed positions, including the number of members on each board or commission, their terms of office, whether they may continue in their positions after their terms expire, whether political balance is required, and the method for selecting the chair. The first table in each pair provides information on full-time positions requiring Senate confirmation as of the end of the 113 th Congress and the pay levels of those positions. The second table for each board or commission tracks appointment activity within the 113 th Congress by the Senate (confirmations, rejections, returns to the President, and elapsed time between nomination and confirmation) as well as further related presidential activity (including withdrawals and recess appointments). In some instances, no appointment action occurred within a board or commission during the 113 th Congress. Information for this report was compiled using the Senate nominations database of the Legislative Information System (LIS) at http://www.lis.gov/nomis/ , the Congressional Record (daily edition), the Weekly Compilation of Presidential Documents , telephone discussions with agency officials, agency websites, the United States Code , and the 2012 Plum Book ( United States Government Policy and Supporting Positions ). Congressional Research Service (CRS) reports regarding the presidential appointments process, nomination activity for other executive branch positions, recess appointments, and other related matters may be found at http://www.crs.gov . Federal executive branch boards and commissions discussed in this report share, among other characteristics, the following: (1) they are independent executive branch bodies located, with four exceptions, outside executive departments; (2) several board or commission members head each entity, and at least one of these members serves full time; (3) the members are appointed by the President with the advice and consent of the Senate; and (4) the members serve fixed terms of office and, except in a few bodies, the President's power to remove them is restricted. For most of the boards and commissions included in this report, the fixed terms of office for member positions have set beginning and end dates, irrespective of whether the posts are filled or when appointments are made. In contrast, for a few agencies, such as the Chemical Safety and Hazard Investigation Board, the full term begins when an appointee takes office and expires after the incumbent has held the post for the requisite period of time. The end dates of the fixed terms of a board's members are staggered so that the terms do not expire all at once. The use of terms with fixed beginning and end dates is intended to minimize the occurrence of simultaneous board member departures and thereby increase leadership continuity. Under such an arrangement, an individual is nominated to a particular position and a particular term of office. An individual may be nominated and confirmed for a position for the remainder of an unexpired term to replace an appointee who has resigned (or died). Alternatively, an individual might be nominated for an upcoming term with the expectation that the new term will be under way by the time of confirmation. Occasionally, when the unexpired term has been for a relatively short period, the President has submitted two nominations of the same person simultaneously--the first to complete the unexpired term and the second to complete the entire succeeding term of office. On some commissions, the chair is subject to Senate confirmation and must be appointed from among the incumbent commissioners. If the President wishes to appoint, as chair, someone who is not on the commission, the President simultaneously submits two nominations for the nominee--one for member and the other for chair. As independent entities with staggered membership, executive branch boards and commissions have more political independence from the President than do executive departments. Nonetheless, the President can sometimes exercise significant influence over the composition of a board or commission's membership when he designates the chair or has the opportunity to fill a number of vacancies at once. For example, President George W. Bush had the chance to shape the Securities and Exchange Commission (SEC) during the first two years of his presidency because of existing vacancies, resignations, and the death of a member. Likewise, during the same time period, President Bush was able to submit nominations for all of the positions on the National Labor Relations Board because of existing vacancies, expiring recess appointments, and resignations. Simultaneous turnover of board or commission membership may result from coincidence, but it also may be the result of a buildup of vacancies after extended periods of time in which the President fails to nominate, or the Senate fails to confirm, members. Two other notable characteristics apply to appointments to some of the boards and commissions. First, for 26 of the bodies in this report, the law limits the number of appointed members who may belong to the same political party, usually to no more than a bare majority of the appointed members (e.g., two of three or three of five). Second, advice and consent requirements also apply to inspector general appointments in four of these organizations and general counsel appointments in three. During the 113 th Congress, President Barack H. Obama submitted nominations to the Senate for 86 of the 149 full-time positions on 34 regulatory and other boards and commissions (most of the remaining positions were not vacant during that time). He submitted a total of 114 nominations for these positions, of which 77 were confirmed, 7 were withdrawn, 30 were returned to the President, and no recess appointments were made. The number of nominations exceeded the number of positions because the President submitted multiple nominations for some positions. In some cases, for example, the President nominated an individual for both the end of a term in progress and a reappointment for the succeeding term. In other cases, the President submitted a second nomination after his first choice failed to be confirmed. Table 1 summarizes the appointment activity for the 113 th Congress. At the end of the Congress, 24 incumbents were serving past the expiration of their terms. In addition, there were 22 vacancies among the 149 positions. The length of time a given nomination may be pending in the Senate has varied widely. Some nominations have been confirmed within a few days, others have been confirmed within several months, and some have never been confirmed. In the board and commission profiles, this report provides, for each board or commission nomination confirmed in the 113 th Congress, the number of days between nomination and confirmation ( days to confirm ). For those nominations confirmed, a mean (average) of 124.2 days elapsed from nomination to confirmation. The median number of days elapsed was 112.0. The difference between these two numbers suggests the mean was pulled upward by a small amount of unusually high numbers. Each of the 34 board or commission profiles in this report is organized into three parts: (1) a paragraph discussing the body's leadership structure, (2) a table identifying its membership as of the end of the 113 th Congress, and (3) a table listing nominations and appointments to its vacant positions during the 113 th Congress. The leadership structure sections discuss the statutory requirements for the appointed positions, including the number of members on each board or commission, their terms of office, whether these members may continue in their positions after their terms expire, whether political balance is required, and the method for selecting the chair. Data on appointment actions during the 113 th Congress appear under both the "Membership as of the End of the 113 th Congress" and the "Appointment Action in the 113 th Congress" sections. The former identifies the agencies' positions requiring Senate confirmation and the incumbents in those positions as of the end of the 113 th Congress. Incumbents whose terms have expired are italicized. Most incumbents serve fixed terms of office and are removable only for specified causes. They generally remain in office when a new Administration assumes office following a presidential election. For those agencies requiring political balance among their members, the party affiliation of an incumbent is listed as Democrat (D), Republican (R), or Independent (I). Both sections include the pay levels of each position. For presidentially appointed positions requiring Senate confirmation, the pay levels fall under the Executive Schedule, which ranges from level I, for Cabinet-level offices, to level V, for the lowest-ranked positions. Most of the chair positions are at level III, and most of the other positions are at level IV. For each board or commission, the "Appointment Action" section provides information about each nomination, in chronological order, including the name of the nominee, the position to which he or she was nominated, the date of submission, the date of confirmation (if any), and the number of days that elapsed from submission to confirmation. It also notes actions other than confirmation (i.e., nominations rejected by the Senate, nominations returned to or withdrawn by the President, and recess appointments). Occasionally, where a position was vacant and the unexpired term of office was to end within a number of weeks or months, the President submitted two nominations for the same nominee: the first to complete the unexpired term, and the second for a full term following completion of the expired term. Tables that show more than one confirmed nomination provide the mean number of days to confirm a nomination. This figure was determined by calculating the number of days elapsed from the nomination and confirmation dates, adding these numbers for all confirmed nominations, and dividing the result by the number of nominations confirmed. For tables with instances of one individual being confirmed more than once (to be a chair and a member, for example), the mean was calculated by averaging all values in the "Days to Confirm" column, including the values for both confirmations. Appendix A provides two tables. Table A-1 includes information on each of the nominations and appointments to regulatory and other collegial boards and commissions during the 113 th Congress, alphabetically organized and following a similar format to that of the "Appointment Action" sections discussed above. It identifies the board or commission involved and the dates of nomination and confirmation. The appendix also indicates if a nomination was withdrawn, returned, rejected, or if a recess appointment was made. In addition, it provides the mean and median number of days taken to confirm a nomination. Table A-2 contains summary information on appointments and nominations by organization. For each of the 34 independent boards and commissions discussed in this report, the appendix provides the number of positions, vacancies, incumbents whose term had expired, nominations, individual nominees, positions to which nominations were made, confirmations, nominations returned to the President, nominations withdrawn, and recess appointments. A list of organization abbreviations can be found in Appendix B . The Chemical Safety and Hazard Investigation Board is an independent agency consisting of five members (no political balance is required), including a chair, who serve five-year terms. The President appoints the members, including the chair, with the advice and consent of the Senate. When a term expires, the incumbent must leave office. (42 U.S.C. SS7412(r)(6)) The Commodity Futures Trading Commission consists of five members (no more than three may be from the same political party) who serve five-year terms. At the end of a term, a member may remain in office, unless replaced, until the end of the next session of Congress. The chair is also appointed by the President, with the advice and consent of the Senate. (7 U.S.C. SS2(a)(2)) The statute establishing the Consumer Product Safety Commission calls for five members who serve seven-year terms. No more than three members may be from the same political party. A member may remain in office for one year at the end of a term, unless replaced. The chair is also appointed by the President, with the advice and consent of the Senate. (15 U.S.C. SS2053) The Defense Nuclear Facilities Safety Board consists of five members (no more than three may be from the same political party) who serve five-year terms. After a term expires, a member may continue to serve until a successor takes office. The President designates the chair and vice chair. (42 U.S.C. SS2286) The Election Assistance Commission consists of four members (no more than two may be from the same political party) who serve four-year terms. After a term expires, a member may continue to serve until a successor takes office. The chair and vice chair, from different political parties and designated by the commission, change each year. (52 U.S.C. SS20923) The Equal Employment Opportunity Commission consists of five members (no more than three may be from the same political party) who serve five-year terms. An incumbent whose term has expired may continue to serve until a successor is appointed, except that no such member may continue to serve (1) for more than 60 days when Congress is in session, unless a successor has been nominated or (2) after the adjournment of the session of the Senate in which the successor's nomination was submitted. The President designates the chair and the vice chair. The President also appoints the general counsel, with the advice and consent of the Senate. (42 U.S.C. SS2000e-4) The Export-Import Bank Board of Directors comprises the bank president, who serves as chair; the bank first vice president, who serves as vice chair; and three other members (no more than three of these five may be from the same political party). All five members are appointed by the President, with the advice and consent of the Senate, and serve for terms of up to four years. An incumbent whose term has expired may continue to serve until a successor is qualified, or until six months after the term expires--whichever occurs earlier (12 U.S.C. SS635a). The President also appoints an inspector general, with the advice and consent of the Senate. (5 U.S.C. App., Inspector General Act of 1978, SS3) The Farm Credit Administration consists of three members (no more than two may be from the same political party) who serve six-year terms. A member may not succeed himself or herself unless he or she was first appointed to complete an unexpired term of three years or less. A member whose term expires may continue to serve until a successor takes office. One member is designated by the President to serve as chair for the duration of the member's term. (12 U.S.C. SS2242) The Federal Communications Commission consists of five members (no more than three may be from the same political party) who serve five-year terms. When a term expires, a member may continue to serve until the end of the next session of Congress, unless a successor is appointed before that time. The President designates the chair. (47 U.S.C. SS154) The Federal Deposit Insurance Corporation Board of Directors consists of five members, of whom two--the comptroller of the currency and the director of the Consumer Financial Protection Bureau--are ex officio. The three appointed members serve six-year terms. An appointed member may continue to serve after the expiration of a term until a successor is appointed. Not more than three members of the board may be from the same political party. The President appoints the chair and the vice chair, with the advice and consent of the Senate, from among the appointed members. The chair is appointed for a term of five years (12 U.S.C. SS1812). The President also appoints the inspector general, with the advice and consent of the Senate. (5 U.S.C. App., Inspector General Act of 1978, SS3) The Federal Election Commission consists of six members (no more than three may be from the same political party) who may serve for a single term of six years. When a term expires, a member may continue to serve until a successor takes office. The chair and vice chair, from different political parties and elected by the commission, change each year. Generally, the vice chair succeeds the chair. (52 U.S.C. SS30106) The Federal Energy Regulatory Commission, an independent agency within the Department of Energy, consists of five members (no more than three may be from the same political party) who serve five-year terms. When a term expires, a member may continue to serve until a successor takes office, except that such commissioner may not serve beyond the end of the session of the Congress in which his or her term expires. The President designates the chair. (42 U.S.C. SS7171) The Federal Labor Relations Authority consists of three members (no more than two may be from the same political party) who serve five-year terms. After the date on which a five-year term expires, a member may continue to serve until the end of the next Congress, unless a successor is appointed before that time. The President designates the chair. The President also appoints the general counsel, with the advice and consent of the Senate. (5 U.S.C. SS7104) The Federal Maritime Commission consists of five members (no more than three may be from the same political party) who serve five-year terms. When a term expires, a member may continue to serve until a successor takes office. The President designates the chair. (46 U.S.C. SS301) The Federal Mine Safety and Health Review Commission consists of five members (no political balance is required) who serve six-year terms. When a term expires, the member must leave office. The President designates the chair. (30 U.S.C. SS823) The Federal Reserve System Board of Governors consists of 7 members (no political balance is required) who serve 14-year terms. When a term expires, a member may continue to serve until a successor takes office. The President appoints the chair and vice chair, who are separately appointed as members, for 4-year terms, with the advice and consent of the Senate. (12 U.S.C. SSSS241-242) The Federal Trade Commission consists of five members (no more than three may be from the same political party) who serve seven-year terms. When a term expires, the member may continue to serve until a successor takes office. The President designates the chair. (15 U.S.C. SS41) The Financial Stability Oversight Council consists of 10 voting members and 5 nonvoting members, and is chaired by the Secretary of the Treasury. Of the 10 voting members, 9 serve ex officio, by virtue of their positions as leaders of other agencies. The remaining voting member is appointed by the President with the advice and consent of the Senate and serves full time for a term of six years. Of the five nonvoting members, two serve ex officio. The remaining three nonvoting members are designated through a process determined by the constituencies they represent, and they serve for terms of two years. The council is not required to have a balance of political party representation. (12 U.S.C. SS5321) The Foreign Claims Settlement Commission, located in the Department of Justice, consists of three members (political balance is not required) who serve three-year terms. When a term expires, the member may continue to serve until a successor takes office. Only the chair, who is appointed by the President with the advice and consent of the Senate, serves full time. (22 U.S.C. SSSS1622, 1622c) The Merit Systems Protection Board consists of three members (no more than two may be from the same political party) who serve seven-year terms. A member who has been appointed to a full seven-year term may not be reappointed to any following term. When a term expires, the member may continue to serve for one year, unless a successor is appointed before that time. The President appoints the chair, with the advice and consent of the Senate, and designates the vice chair. (5 U.S.C. SSSS1201-1203) The National Credit Union Administration Board of Directors consists of three members (no more than two members may be from the same political party) who serve six-year terms. When a term expires, a member may continue to serve until a successor takes office. The President designates the chair. (12 U.S.C. SS1752a) The National Labor Relations Board consists of five members who serve five-year terms. Political balance is not required, but, by tradition, no more than three members are from the same political party. When a term expires, the member must leave office. The President designates the chair. The President also appoints the general counsel, with the advice and consent of the Senate. (29 U.S.C. SS153) The National Mediation Board consists of three members (no more than two may be from the same political party) who serve three-year terms. When a term expires, the member may continue to serve until a successor takes office. The board annually designates a chair. (45 U.S.C. SS154) The National Transportation Safety Board consists of five members (no more than three may be from the same political party) who serve five-year terms. When a term expires, a member may continue to serve until a successor takes office. The President appoints the chair from among the members for a two-year term, with the advice and consent of the Senate, and designates the vice chair. (49 U.S.C. SS1111) The Nuclear Regulatory Commission consists of five members (no more than three may be from the same political party) who serve five-year terms. When a term expires, the member must leave office. The President designates the chair. The President also appoints the inspector general, with the advice and consent of the Senate. (42 U.S.C. SS5841 and 5 U.S.C. App., Inspector General Act of 1978, SS3) The Occupational Safety and Health Review Commission consists of three members (political balance is not required) who serve six-year terms. When a term expires, the member must leave office. The President designates the chair. (29 U.S.C. SS661) The Postal Regulatory Commission consists of five members (no more than three may be from the same political party) who serve six-year terms. After a term expires, a member may continue to serve until his or her successor takes office, but the member may not continue to serve for more than one year after the date upon which his or her term otherwise would expire. The President designates the chair, and the members select the vice chair. (39 U.S.C. SS502) The Privacy and Civil Liberties Oversight Board consists of five members (no more than three may be from the same political party) who serve six-year terms. When a term expires, the member may continue to serve until a successor takes office. Only the chair, who is appointed by the President with the advice and consent of the Senate, serves full time. (42 U.S.C. SS2000ee) The Implementing Recommendations of the 9/11 Commission Act of 2007, P.L. 110-53 , Title VIII, Section 801 (121 Stat. 352) established the Privacy and Civil Liberties Oversight Board. Previously, the Privacy and Civil Liberties Oversight Board functioned as part of the White House Office in the Executive Office of the President. That board ceased functioning on January 30, 2008. The Railroad Retirement Board consists of three members (political balance is not required) who serve five-year terms. When a term expires, the member may continue to serve until a successor takes office. The President appoints the chair and an inspector general with the advice and consent of the Senate. (45 U.S.C. SS231f and 5 U.S.C. App., Inspector General Act of 1978, SSSS3, 12) The Securities and Exchange Commission consists of five members (no more than three may be from the same political party) who serve five-year terms. When a term expires, the member may continue to serve until the end of the next session of Congress, unless a successor is appointed before that time. The President designates the chair. (15 U.S.C. SS78d) The Surface Transportation Board, located within the Department of Transportation, consists of three members (no more than two may be from the same political party) who serve five-year terms. When a term expires, the member may continue to serve until a successor takes office but for not more than one year after expiration. The President designates the chair. (49 U.S.C. SS701) The United States International Trade Commission consists of six members (no more than three may be from the same political party) who serve nine-year terms. A member of the commission who has served for more than five years is ineligible for reappointment. When a term expires, a member may continue to serve until a successor takes office. The President designates the chair and vice chair for two-year terms of office, but they may not belong to the same political party. The President may not designate a chair with less than one year of continuous service as a member. This restriction does not apply to the vice chair. (19 U.S.C. SS1330) The United States Parole Commission is an independent agency in the Department of Justice. The commission consists of five commissioners (political balance is not required) who serve for six-year terms. When a term expires, a member may continue to serve until a successor takes office. In most cases, a commissioner may serve no more than 12 years. The President designates the chair (18 U.S.C. SS4202). The commission was previously scheduled to be phased out, but Congress has extended its life several times. Under P.L. 113-47 , Section 2 (127 Stat. 572), it was extended until November 1, 2018. (18 U.S.C. SS3551 note) The United States Sentencing Commission is a judicial branch agency that consists of seven voting members who are appointed to six-year terms and two nonvoting members. The seven voting members are appointed by the President, with the advice and consent of the Senate. Only the chair and three vice chairs, selected from among the members, serve full time. The President appoints the chair, with the advice and consent of the Senate, and designates the vice chairs. At least three members must be federal judges. No more than four members may be of the same political party. No more than two vice chairs may be of the same political party. No voting member may serve more than two full terms. When a term expires, an incumbent may continue to serve until he or she is reappointed, a successor takes office, or Congress adjourns sine die at the end of the session that commences after the expiration of the term, whichever is earliest. The Attorney General (or designee) serves ex officio as a nonvoting member (28 U.S.C. SSSS991-992). The chair of the United State Parole Commission also is an ex officio nonvoting member of the commission. (18 U.S.C. SS3551 note) Appendix A. Summary of All Nominations and Appointments to Collegial Boards and Commissions Appendix B. Board and Commission Abbreviations

The President makes appointments to certain positions within the federal government, either using authorities granted to the President alone or with the advice and consent of the Senate. There are some 149 full-time leadership positions on 34 federal regulatory and other collegial boards and commissions for which the Senate provides advice and consent. This report identifies all nominations submitted to the Senate for full-time positions on these 34 boards and commissions during the 113th Congress. Information for each board and commission is presented in profiles and tables. The profiles provide information on leadership structures and statutory requirements (such as term limits and party balance requirements). The tables include full-time positions confirmed by the Senate, pay levels for these positions, incumbents as of the end of the 113th Congress, incumbents' parties (where balance is required), and appointment action within each board or commission. Additional summary information across all 34 boards and commissions appears in the appendix. During the 113th Congress, the President submitted 114 nominations to the Senate for full-time positions on these boards and commissions (most of the remaining positions on these boards and commissions were not vacant during that time). Of these 114 nominations, 77 were confirmed, 7 were withdrawn, and 30 were returned to the President. At the end of the 113th Congress, 24 incumbents were serving past the expiration of their terms. In addition, there were 22 vacancies among the 149 positions. Information for this report was compiled using the Senate nominations database of the Legislative Information System (LIS) at http://www.lis.gov/nomis/, the Congressional Record (daily edition), the Weekly Compilation of Presidential Documents, telephone discussions with agency officials, agency websites, the United States Code, and the 2012 Plum Book (United States Government Policy and Supporting Positions). This report will not be updated.

I n general, the Senate's presiding officer does not take the initiative in enforcing Senate rules and precedents. Instead, a Senator may raise a point of order if he or she believes the Senate is taking (or is about to take) an action that violates the rules. In most circumstances, the presiding officer rules on the point of order on advice of the Parliamentarian; that ruling is typically subject to an appeal on which the Senate votes (unless the appeal is tabled or withdrawn). Pursuant to Rule XX, however, in certain circumstances a point of order is not ruled on by the presiding officer but is instead submitted to the Senate for its decision. A point of order that a pending matter (a bill or amendment, for example) violates the U.S. Constitution presents one such circumstance. This report explains Senate rules, precedents, and practices in regard to these constitutional points of order, including an analysis of recent cases in which such a point of order has been raised. This report will be updated as events warrant. The process for raising a constitutional point of order against a pending question does not differ from that for raising other points of order. A Senator seeking to raise a constitutional point of order would simply address the presiding officer at a time when no one else holds the floor. The Senator might say, "Mr. President, I rise to point of order" or simply "Point of order, Mr. President" and then proceed to state and explain the way in which the pending matter violates the Constitution. Raising a constitutional point of order (or any point of order) confers no special recognition rights--unless a unanimous consent (UC) agreement has provided for it being raised, or considered as raised, at a certain time. No Senator can interrupt another Senator without his or her consent for the purposes of raising a point of order. In addition, a Senator loses the floor after he or she has raised the point of order, though the Senator could again seek recognition from the presiding officer once the point of order is submitted. A UC agreement may affect the availability of any point of order when the agreement includes language that prohibits all or certain points of order. In addition, if a UC agreement specifies that a vote on a matter would occur "at a time certain without any intervening action," it would preclude a point of order being raised. Further, if a UC agreement limits the time for debate of a matter, then the point of order can be raised against it only after the debate time has been used or yielded back--except by unanimous consent. This is because if a matter has been guaranteed--by UC--a certain amount of debate or a vote at a time certain, then a new UC agreement is required to allow a point of order before that debate is complete, since the disposition of the point of order could have the effect of making the matter fall. Under current practice and precedents relating to Rule XX, a point of order that a pending matter is unconstitutional is submitted to the Senate for decision rather than ruled upon by the presiding officer. The logic behind the relevant precedents is that while the presiding officer has authority to interpret Senate rules, he or she does not have the authority to interpret the Constitution. While the Senate, in its earliest history, similarly disposed of constitutional points of order through a vote of the body, there were some intervening periods during which practice varied. For an approximately 40-year period in the late 19 th and early 20 th centuries, these points of order were not submitted for disposition, but instead the proceedings resembled the current practice in the House of Representatives, under which Members are expected to implicitly express their opinion on the constitutionality of a measure by their vote for or against the measure itself. However, the Senate has generally followed its current practice of submitting constitutional points of order since establishing a relevant precedent in 1924. Sustaining the submitted point of order requires an affirmative vote of a majority of Senators voting, assuming a quorum is present. A point of order submitted to the Senate for decision is debatable except when the Senate is operating under cloture. Under most circumstances, accordingly, a cloture process could theoretically be used to end extended debate and force a vote on the point of order. Under some circumstances, statutory provisions may limit debate on points of order; these debate limits would apply equally to a submitted constitutional point of order. While a submitted point of order is generally subject to extended debate, it is also subject to a non-debatable motion to table. The tabling motion could be made at any time after the point of order has been raised unless the Senate had agreed by UC to provide a specific amount of time for debate on the point of order, in which case the tabling motion could not be made until the time has expired or been yielded back. Agreeing to a tabling motion requires a majority of those voting (assuming a quorum is present). If the motion is agreed to, it adversely and permanently disposes of the point of order. Thus, if a Senator makes a motion to table the point of order, a majority of Senators could dispose of the point of order by agreeing to the motion to table. This disposition would have the effect of determining the constitutional point of order not to be well taken. A unanimous consent agreement may affect the debatability of a submitted point of order. For example, if a UC agreement sets a time certain for a vote on the matter on which a point of order is contemplated, then a submitted point of order raised against that matter would be subject to debate only until that time expires. Other language in a UC agreement (e.g., that establishes a specific amount of debate time on a pending amendment and provides for another action immediately upon the disposition of that amendment) may also preclude extended debate on a constitutional point of order raised against that amendment. Constitutional points of order are not common, relative to many other points of order that are more routinely made (e.g., that an amendment violates the Congressional Budget Act or that an amendment to an appropriations bill constitutes legislation). Table 1 presents data on constitutional points of order in the Senate made since 1989 (the start of the 101 st Congress) on which the Senate voted, as identified in the Legislative Information System (LIS) and the Daily Digest . (An examination of references to constitutional points of order in the full text of the Congressional Record for the Congresses in question did not produce any additional examples.) The table does not include any constitutional points of order that were raised but then withdrawn before a Senate vote or those that may have been rendered moot because the underlying matter was withdrawn or otherwise negatively disposed of. Of the cases identified, more than half (11 of 17) were disposed of negatively, either through a direct vote on the point of order or via a successful motion to table; the remaining six points of order were sustained. Five of the six sustained points of order were in relation to an alleged violation of the Origination Clause (Article 1, Section 7, clause 1, which provides that only the House may originate revenue measures). Of the 11 points of order that were not well taken, 10 were raised in relation to other constitutional provisions. The table makes clear that constitutional points of order raised in the 106 th and 107 th Congresses were raised exclusively on the grounds that the pending matter would violate the Origination Clause. In the most recent Congresses (111 th and 113 th ) in which constitutional points of order were raised, however, they were raised only in relation to other provisions of the Constitution. This dominance of points of order on the grounds of other (non-Origination Clause) constitutional provisions is also evident in the Congresses spanning the 1990s. This recent ebb and flow in the constitutional grounds on which such points of order are raised is similar to the historical variation that characterizes previous periods. While the Origination Clause was the primary constitutional provision invoked prior to the 1960s, other constitutional provisions were referenced with almost equal frequency in the subsequent decades. For example, from the 1960s to 1980s, points of order were raised on constitutional grounds such as the ability of the Senate to make its own rules, the process for proposing constitutional amendments, representation and apportionment issues, the line item veto, and the Equal Protection Clause. As noted in the table above, the two most recent decades included points of order raised in relation to the First Amendment, the Due Process Clause, questions of congressional apportionment and representation, and the powers afforded to Congress (and reserved to the states), among others.

In general, the Senate's presiding officer does not take the initiative in enforcing Senate rules and precedents. Instead, a Senator may raise a point of order if he or she believes the Senate is taking (or is about to take) an action that violates the rules. In most circumstances, the presiding officer rules on the point of order on advice of the Parliamentarian; that ruling is typically subject to an appeal on which the Senate votes (unless the appeal is tabled or withdrawn). Pursuant to Rule XX, however, in certain circumstances a point of order is not ruled on by the presiding officer but is instead submitted to the Senate for its decision. A point of order that a pending matter (a bill or amendment, for example) violates the U.S. Constitution presents one such circumstance. This report explains Senate rules, precedents, and practices in regard to these constitutional points of order, including an analysis of recent cases in which such a point of order has been raised, and will be updated as events warrant. A Senator can raise a constitutional point of order against any pending matter unless a unanimous consent agreement prohibits points of order or provides for a vote on the pending matter without any intervening action. A unanimous consent agreement may also affect the time at which it is in order to raise a point of order. If a specific amount of debate has been agreed to for the pending matter, the point of order cannot be raised until the time has expired or been yielded back. While past practice has varied, the Senate's rules and precedents currently require a constitutional point of order to be submitted to the Senate for disposition, with a majority of those voting (a quorum being present) required to sustain the point of order. The point of order is debatable, though the time for debate may be subject to limitations under a unanimous consent agreement or under cloture, in some circumstances, pursuant to statutory provisions. The submitted point of order is, however, subject to a non-debatable motion to table. This report identifies 17 constitutional points of order that have been raised and received a Senate vote since 1989. Eleven of these cases were disposed of negatively.

In every war fought by the United States, civilian ships have supported military operations by transporting supplies and personnel. The civilians that have served on these vessels historically have worked in varying capacities either for private shipping companies under contract with the federal government or for the government itself. These civilians are collectively referred to as merchant mariners . In World War II, an estimated 8,500 merchant mariners were killed and 11,000 were wounded. During Operation Enduring Freedom (OEF) and Operation Iraqi Freedom (OIF), it is estimated that 63% of the military cargo shipped to the Middle East and Afghanistan was delivered by U.S.-flagged commercial vessels crewed by merchant mariners and an additional 35% of military cargo was transported by government-owned vessels crewed by civilian federal employees and federal contractors. Although merchant mariners have always played an important role in support of U.S. war efforts, they generally have not been considered veterans for the purposes of federal benefits. Currently, only limited groups of World War II-era merchant mariners are eligible for benefits from the Department of Veterans Affairs (VA). After World War II, merchant mariners sought through legislation to gain recognition as veterans. Legislation was introduced either to provide benefits to merchant mariners comparable to those provided under the Servicemen's Readjustment Act of 1944 (P.L. 78-346), commonly known as the GI Bill, or to expand the employee benefits merchant mariners were receiving at that time. During hearings in late 1945, the House Committee on Merchant Marine and Fisheries heard testimony on four bills that would have provided some benefits to merchant seamen. One of these bills, H.R. 2346, would have provided benefits to merchant mariners comparable to those of other World War II veterans. Testimony in favor of H.R. 2346 was heard from a number of former merchant seamen and the Merchant Marine Veterans Association. Testimony in opposition to H.R. 2346 came from various agencies, including the War Department, the Veterans Administration, and the American Legion. Opponents to granting veteran status to merchant mariners generally focused on the freedom of a merchant mariner to make decisions about whether or not to take a particular voyage or leave service. They also focused on the higher earnings of merchant mariners relative to uniformed Navy personnel. H.R. 476, introduced in 1947, would have expanded the existing benefits for merchant seamen related to health care and disability and introduced an education benefit. Ultimately, no legislation was enacted in the immediate aftermath of World War II to grant veteran status to merchant mariners or to provide additional benefits to merchant mariners related to health care, disability, or education. Section 401 of the GI Bill Improvement Act of 1977 ( P.L. 95-202 ) granted veterans' benefit eligibility to civilians who served as Women's Air Forces Service Pilots (WASPS) during World War II. In addition, Section 401 of P.L. 95-202 provided the Secretary of Defense the authority to extend "active duty" status for the purpose of eligibility for federal veterans' benefits to other groups of civilian federal employees or contractors who rendered service to the Armed Forces and were "similarly situated" to the WASPS. Regulations implementing P.L. 95-202 , issued as Department of Defense Directive 1000.20, delegated the authority to grant active duty status to civilian groups to the Secretary of the Air Force. In addition, Directive 1000.20 established the Department of Defense Civilian/Military Service Review Board to review each application for active duty status. The factors to be used in reviewing such applications included the uniqueness of service rendered by the group and whether or not the group was subject to military control, discipline, and justice. A complete list of groups granted active duty status for the purpose of eligibility for veterans' benefits pursuant to P.L. 95-202 is provided in regulation. In 1982, the Secretary of the Air Force rejected the application for active duty status for oceangoing merchant mariners who served during World War II. In 1985, the Secretary rejected the applications of merchant mariners who served in contested waters in World War II, merchant mariners involved in any military invasion during World War II, and all merchant mariners involved in Operation Mulberry during World War II. These rejections were recommended by the Civilian/Military Service Review Board. The rejection of the oceangoing merchant mariners was based on the Secretary of the Air Force's decision that these groups received only limited military training; did not render service exclusively for the Armed Forces; were not subject exclusively to military discipline; were not subject to "pervasive" military control; had no reasonable expectation of "active military service" status, and were not part of a wartime organization formed for or because of a wartime need. In recommending the rejection of the application of the Operation Mulberry group, the Civilian/Military Service Review Board stated that this group "was too broad and diverse to make an adequate determination as to the roles played by the multitude of subgroups and members that made up Operation Mulberry." However, although the application of all merchant mariners that participated in Operation Mulberry was rejected, the application of those who served only on blockships during this operation was approved. In recommending the approval of the blockship group's application, the Civilian/Military Review Board stated that [t]hese merchant marines performed a uniquely military mission in a combat zone that would not normally be considered a mission of the Merchant Marine. The merchant crews were not tasked with delivering a cargo, per se, but were asked to be a part of a team to create an artificial harbor a beachhead mission normally associated with military engineers for a military operation. This is not a mission that the Merchant Marine historically perform. This group, then, was a creation of World War II for that specific time and place, i.e., the Invasion of Normandy. Following the 1985 rejections of applications of merchant mariners for active duty status, a lawsuit was filed challenging the denial of active duty status for World War II oceangoing merchant mariners and those who participated in World War II invasions. The plaintiffs argued that the merchant mariners included in these applications satisfied the established criteria to a greater extent than many of the previously approved groups and argued that the denials were inconsistent with the Secretary of the Air Force's prior decisions. The Secretary of the Air Force responded that the plaintiffs misunderstood the designation criteria and outlined characteristics that the approved groups shared. The U.S. District Court for the District of Columbia ruled that the Secretary of the Air Force erred in rejecting the applications of the oceangoing merchant mariners and those that participated in World War II invasions. The court remanded these individuals' applications back to the Secretary of the Air Force for reconsideration. In 1988, following the Schumacher decision, the Secretary of the Air Force granted active duty status for the purpose of eligibility for veterans' benefits to World War II-era merchant mariners who served on vessels engaged in oceangoing service from December 7, 1941, to August 15, 1945. Section 402 of the Veterans Programs Enhancement Act of 1988 ( P.L. 105-368 ) extended veterans' burial benefits and the right to interment in national cemeteries to merchant mariners who served on vessels engaged in oceangoing service from August 16, 1945, to December 31, 1946. In 1999, the Secretary of the Air Force determined that the service of oceangoing merchant marines during the period from August 15, 1945, to December 31, 1946 (those covered by P.L. 105-368 ) is not considered active duty under the provisions of P.L. 95-202 for the purposes of other benefits administered by the VA. Under current law and regulations, only the following groups of merchant mariners are considered to have served on active duty or are otherwise eligible for veterans' benefits. No other merchant mariners are eligible for any veterans' benefits administered by the VA. United States merchant seamen who served on blockships in support of Operation Mulberry. American merchant marine in oceangoing service during the period of armed conflict, December 7, 1941, to August 15, 1945, and who meet the following qualifications: was employed by the War Shipping Administration or Office of Defense Transportation (or their agents) as a merchant seaman documented by the U.S. Coast Guard or the Department of Commerce (Merchant Mariner's Document/Certificate of Service) or as a civil servant employed by the U.S. Army Transport Service (later redesignated U.S. Army Transportation Corps, Water Division) or the Naval Transportation Service; and served satisfactorily as a crew member during the period of armed conflict, December 7, 1941, to August 15, 1945, aboard merchant vessels in oceangoing--that is, foreign, intercoastal, or coastwise--service (per 46 U.S.C. SSSS10301 and 10501) and further to include near foreign voyages between the United States and Canada, Mexico, or the West Indies via ocean routes, or public vessels in oceangoing service or foreign waters. Served between August 16, 1945, and December 31, 1946, as a member of the United States merchant marine (including the Army Transport Service and the Naval Transport Service) serving as a crewmember of a vessel that was operated by the War Shipping Administration or the Office of Defense Transportation (or an agent of either); operated in waters other than inland waters, the Great Lakes, and other lakes, bays, and harbors of the United States; under contract or charter to, or property of, the government of the United States; and serving the Armed Forces; and while so serving, was licensed or otherwise documented for service as a crewmember of such a vessel by an officer or employee of the United States authorized to license or document the person for such service. Although some World War II-era merchant mariners were granted eligibility for veterans' benefits in 1985 and 1988, the passage of time between their service and the granting of this eligibility may have made it impossible for them to fully access these benefits. For example, when these former merchant mariners were of typical college age after the war, they were not eligible for benefits under the GI Bill. In addition, those with service-connected disabilities or medical conditions may have lost out on nearly 40 years of VA disability compensation or medical benefits. H.R. 154 , the Honoring Our WWII Merchant Mariners Act of 2017, would provide compensation to former World War II-era merchant mariners to account for the benefits they were not able to access before being granted veterans' benefit eligibility in the 1980s. Similar legislation has been introduced in each Congress since the 108 th Congress. Specifically, this legislation would provide a one-time payment of $25,000 to any merchant mariner who served between December 7, 1941, and December 31, 1946, and who otherwise meets the definition of service provided for burial benefits and interment eligibility in P.L. 105-368 . Eligible persons would have one year from the date of enactment of the legislation to apply for benefits. A total of $125 million would be authorized to be appropriated in FY2017 for these benefits, to be available until expended. Although the benefits created by this legislation would partially compensate former merchant mariners for lost benefits, H.R. 154 would place the former merchant mariners in a unique position compared to other civilians who served in World War II and other veterans. Active duty status for the purposes of eligibility for veterans' benefits has been extended under the provisions of P.L. 95-202 to 33 groups of civilians who served during World Wars I and II, all of whom can claim to have missed the opportunity to claim certain benefits during the period between their service and the granting of active duty status. However, if H.R. 154 were to be enacted, only the two merchant mariner groups would be eligible for any form of compensation to account for these lost benefits. In addition, merchant mariners would join Medal of Honor winners as the only groups eligible for cash compensation from the VA without having to demonstrate a financial hardship (for VA pension benefits) or a service-connected disability (for VA disability compensation).

Although merchant mariners have supported the Armed Forces in every war fought by the United States, they generally are not considered veterans for the purpose of eligibility for federal benefits. Pursuant to legislation enacted in 1977 (P.L. 95-202) and 1988 (P.L. 105-368) and to decisions made by the Secretary of the Air Force in 1985 and 1988, the following groups of World War II-era merchant mariners are the only merchant mariners eligible for veterans' benefits. Eligible for all veterans' benefits: United States merchant seamen who served on blockships in support of Operation Mulberry. American merchant marine in oceangoing service during the period of armed conflict, December 7, 1941, to August 15, 1945, and who meet the following qualifications: employed by the War Shipping Administration or Office of Defense Transportation (or their agents) as a merchant seaman documented by the U.S. Coast Guard or the Department of Commerce (Merchant Mariner's Document/Certificate of Service) or as a civil servant employed by the U.S. Army Transport Service (later redesignated U.S. Army Transportation Corps, Water Division) or the Naval Transportation Service; and served satisfactorily as a crew member during the period of armed conflict, December 7, 1941, to August 15, 1945, aboard merchant vessels in oceangoing--that is, foreign, intercoastal, or coastwise--service (per 46 U.S.C. SSSS10301 and 10501) and further to include near foreign voyages between the United States and Canada, Mexico, or the West Indies via ocean routes, or public vessels in oceangoing service or foreign waters. Eligible for burial benefit and national cemetery interment only: Served between August 16, 1945, and December 31, 1946, as a member of the United States merchant marine (including the Army Transport Service and the Naval Transport Service), serving as a crewmember of a vessel that was operated by the War Shipping Administration or the Office of Defense Transportation (or an agent of either); operated in waters other than inland waters, the Great Lakes, and other lakes, bays, and harbors of the United States; under contract or charter to, or property of, the government of the United States; and serving the Armed Forces; and while so serving, was licensed or otherwise documented for service as a crewmember of such a vessel by an officer or employee of the United States authorized to license or document the person for such service. H.R. 154, the Honoring Our WWII Merchant Mariners Act of 2017, would provide one-time compensation of $25,000 to World War-II merchant mariners to account for benefits they were not able to access before being granted veterans' benefit eligibility.

The Modified Waters Deliveries Project (Mod Waters) is being implemented by the Department of the Interior (DOI) and the U.S. Army Corps of Engineers in southern Florida. (See Figure 1 .) For FY2007, the Administration has requested a total of $48 million for the project: $35 million through the Corps and $13.3 million through the DOI. The House-passed Interior and Energy and Water appropriations bills, and the Senate-reported Interior appropriations bill, provide the requested amount of funding for Mod Waters for FY2007. The Senate-reported Energy and Water bill, however, provides no funding for Mod Waters (for the Corps) for FY2007 and limits funds to $35 million for the Corps to construct this project. The Senate Appropriations Committee report on the Energy and Water bill ( S.Rept. 109-274 ) states that Mod Waters should be solely funded by the DOI since it benefits Everglades National Park. DOI and the Corps jointly funded Mod Waters in FY2007. Previously, DOI had solely funded the project. Joint funding of Mod Waters has generated controversy and raised the question of whether the Corps is authorized to receive appropriations to work on the project. The Administration's position appeared to be for the Corps to pay for roughly two-thirds of the remaining $146 million required to complete the project from FY2007 to FY2009. For FY2006, $25 million was appropriated to the DOI, and $35 million to the Corps for this project. A provision in the Interior Appropriations Act for FY2006 ( P.L. 109-54 ) conditions funding for Mod Waters on meeting state water quality standards. This provision cites provisions in the FY2004 Interior Appropriations Act, which states that funds appropriated for Mod Waters will be provided unless the Secretary of the Interior, Secretary of the Army, Administrator of the EPA, and Attorney General indicate in a joint report (to be filed annually until December 31, 2006) that water entering the A.R.M. Loxahatchee National Wildlife Refuge and Everglades National Park does not meet state water quality standards, and the House and Senate Committees on Appropriations respond in writing disapproving the further expenditure of funds. The FY2007 Administration request did not contain this condition; however, the House-passed Interior Appropriations bill and Senate-reported bill both contain this provision. The Modified Water Deliveries Project was authorized by the Everglades National Park Protection and Expansion Act of 1989 ( P.L. 101-229 ; 16 U.S.C. SSSS410r-5, etc.) to improve water deliveries to Everglades National Park (ENP) and, to the extent possible, restore the natural hydrological conditions within the park. The completion of Mod Waters is expected to be significant step towards the implementation of the Comprehensive Everglades Restoration Plan (CERP; Title VI, P.L. 106-541 , the Water Resources Development Act of 2000 [WRDA 2000]). Indeed, Mod Waters must be completed before appropriations can be made to construct other restoration projects in the east Everglades (SS601(b)(2)(D)(iv) of WRDA 2000). Mod Waters is expected to consist of structural modifications and additions to the Central and Southern Florida Project (C&SF Project) to improve the timing, distribution, and quantity of water flow to the Northeast Shark River Slough. Increased water flow to the Northeast Shark River Slough will increase water supplies in the ENP and is expected to improve the natural habitat and hydrology of a portion of the Everglades ecosystem. There are four components to Mod Waters: 8.5 SMA flood mitigation, Tamiami Trail modifications, conveyance and seepage control features, and Combined Structural and Operational Plan (CSOP). The 8.5 SMA flood mitigation and Tamiami Trail modifications are discussed below. Mod Waters is expected to flood some residential and agricultural areas adjacent to the park. Legislation authorizing this project instructs the Secretary of the Army to determine if residential and agricultural areas within or adjacent to the 8.5 SMA will be flooded from the hydrological changes of Mod Waters (SS104(a)). If these areas are under threat of flooding, the law mandates that a flood protection system must be developed for the area (SS104(b)). To prevent flooding, several mitigation features have been developed. One of these features is called Alternative 6D, which is a plan for protecting residents in the 8.5 SMA from flood waters resulting from the project. The purpose of the Tamiami Trail modification is to identify alterations to the highway that would improve water flows for Northeast Shark River Slough and Everglades National Park. A general reevaluation report and environmental impact statement have been prepared for this project. These reports include a recommended alternative calling for two bridges that would allow water flows to pass across the highway. Construction is expected to begin in 2007. Three issues are being debated about the implementation of Mod Waters, including its estimated funding level, project delays, and the controversy surrounding land acquisition in the 8.5 SMA. The question of whether the Corps is authorized to fund Mod Waters was an issue during the deliberation over the FY2006 Energy and Water Appropriations. Arguments used to support the proposition that the Corps could be authorized to directly fund Mod Waters cite SS102(f) of the Everglades National Park Protection and Expansion Act of 1989 ( P.L. 101-229 ), which is the only section that authorizes funding and authorizes such sums as may be necessary to carry out the provisions of the act. This provision would include SS104, which authorizes Mod Waters, though it primarily authorizes activities carried out by the Corps. Arguments used to argue against Corps authorization to fund Mod Waters could cite the long history of transfers from the NPS to the Corps, which could be argued to establish a strong precedent for the lack of Corps authority. Due to these conflicting arguments and the lack of clear legislative intent, the authority for the Corps to directly fund Mod Waters might still remain debatable. In the FY2007 Energy and Water Appropriations debate, the Senate Energy and Water Appropriations Committee has not provided funds to the Corps for Mod Waters. Rising project costs for Mod Waters has led some critics to question its viability. The original cost of completing Mod Waters was estimated at $81.3 million in 1990. The current estimated cost for completing the project is $398 million. To date, approximately $252 million has been appropriated for constructing and implementing Mod Waters, and $146 million more is estimated to be needed to finish the project (i.e., FY2007-FY2009). Some contend that changes in the implementation plan, the rising cost of land acquisition, and flood mitigation requirements have led to higher costs. This was reflected, according to some, in the changes in the 1992 General Design Memorandum, which were derived from updated modeling data and the project's need to be compatible with CERP. Mod Waters was originally estimated to be completed by 1997, yet now some argue it is unclear as to when or even whether the project will be completed. The FY2006 Administration request indicates that funding will be requested through FY2009. Some contend that delays are due to the undefined roles of DOI and the Corps in implementing the project, a lack of a unified approach to restoration, redesigning the project, and litigation regarding the 8.5 SMA and Tamiami Trail portion of the project. Some argue that the delay in implementing Mod Waters jeopardizes implementation of CERP projects, causes further degradation within Everglades National Park, and will set a precedent for delays and deliberation regarding land acquisition activities when CERP projects are being implemented. Some proponents of the project contend that ongoing land acquisition in the 8.5 SMA will minimize any future delays. Implementation of Mod Waters is dependent on acquiring land in the 8.5 SMA. Land acquisition in this area is controversial because there are several unwilling sellers and the Corps is exercising eminent domain in some cases to acquire necessary lands. The 8.5 SMA is a region adjacent to ENP of approximately 5,600 acres. Due to its low topography and lack of drainage, parts of the 8.5 SMA frequently flood for several months during the year. With the implementation of Mod Waters, the Corps expects that most of the 8.5 SMA would flood. The Corps developed a flood mitigation plan in 1992 to provide flood mitigation for residents in the 8.5 SMA and allow for the implementation of Mod Waters. However, the 1992 Plan was later deemed "unworkable" by the superintendent of Everglades National Park, who claimed that it would not provide full flood protection for current and future residents in the 8.5 SMA. The Corps began to devise a new plan for Mod Waters and the 8.5 SMA in 1999, which considered several alternative plans, including the complete buyout of the 8.5 SMA. A new plan, referred to as Alternative 6D, was proposed by the Corps in 2000. This plan includes a perimeter levee, seepage canal, pump station, and storm water drainage for flood protection in the 8.5 SMA. Instead of a complete buyout of the 8.5 SMA, this plan proposed the acquisition of approximately 2,500 acres in the 8.5 SMA (39% of the total area) and the acquisition of 77 residential tracts (24 tenant-occupied tracts and 53 owner-occupied tracts) in the 8.5 SMA (13% of the total number of "residential areas" in the 8.5 SMA). Some residents who were unwilling to sell their land in the 8.5 SMA filed suit against the Corps in 2001. They asserted that the Corps does not have the authority to implement a plan that does not protect the entire 8.5 SMA from flooding, and that the Corps does not have the authority to exercise eminent domain or spend money to acquire their land through condemnation. On July 5, 2002, a district judge restricted the Corps from veering from its original mandate to protect the entire community from flooding, and prevented the Corps from acquiring land in the 8.5 SMA. The Corps later appealed this decision and are now acquiring lands in the area. To help implement Mod Waters, Congress included a provision in the Consolidated Appropriations Resolution for FY2003 (Division F, Title I, SS157 of P.L. 108-7 ) that authorizes the Corps to implement a flood protection plan (Alternative 6D) for the 8.5 SMA as part of Mod Waters. Three conditions are specified in the section authorizing implementation of Alternative 6D: (1) the Corps may acquire residential property needed to carry out Alternative 6D if the owners are first offered comparable property in the 8.5 SMA that will be provided with flood protection; (2) the Corps is authorized to acquire land from willing sellers in the flood-protected portion of the 8.5 SMA to carry out the first condition; and (3) the Corps and the nonfederal sponsor may carry out these provisions with funds provided under the Everglades National Park Protection and Expansion Act of 1989 ( P.L. 101-229 ; 16 U.S.C. SS410r-8) and funds provided by the DOI for land acquisition for restoring the Everglades. Some critics of land acquisition in the 8.5 SMA base their arguments on the same principles used to criticize the acquisition of the entire 8.5 SMA--that the federal government should not exercise eminent domain to remove unwilling sellers and that the federal government is obligated to protect all residential areas from floods under P.L. 101-229 . Some critics also argue that there are several unwilling sellers in the area and that if condemnations proceed, delays due to litigation will be inevitable and will eventually harm the ecosystem. The Corps asserts that there are several willing sellers in the 8.5 SMA. Approximately 78% of the 843 needed tracts have been acquired, and of the remaining 189 tracts, 57% are in negotiations for acquisition and 43% are expected to be condemned.

The Modified Water Deliveries Project (Mod Waters) is a controversial ecological restoration project in south Florida designed to improve water delivery to Everglades National Park. The implementation schedule of Mod Waters is of interest to Congress partly because its completion is required before the implementation of portions of the Comprehensive Everglades Restoration Plan. Concerns have been raised in hearings on the Administration's FY2007 budget request regarding the cost of implementing the project, project delays, and the U.S. Army Corps of Engineers' role in funding the project. Currently, the project is eight years behind schedule and will cost an estimated $400 million to build. Part of the delay is due to extended efforts to acquire land from private and state owners. Federal agencies have used eminent domain to acquire some lands, a process that has been contentious. Further, funding for the project in Interior appropriations acts (FY2004-FY2006) is being conditioned on the State of Florida meeting water quality standards by reducing excessive phosphorus, among other things. This report provides background on Mod Waters and discusses issues relating to its current status, funding, and land acquisition needs. This report will be updated as warranted.

On July 16, 1787, the 55 Founding Fathers at the Constitutional Convention in Philadelphia reached what is commonly called the "Great Compromise." The compromise emerged after a struggle between the large and small states over the system of representation for the House and Senate. The Framers readily accepted the principle of bicameralism--a two-house national legislature. After all, the British Parliament was bicameral as were most state legislatures. However, the Framers encountered sharp divisions in grappling with these two questions: should representation (the number of Members) in both chambers be apportioned according to each state's population, or, instead, should representation in the House be determined by population and in the Senate on state equality? Under the first approach, the large states would dominate both chambers; under the second plan, the large states would be advantaged in the House while all states, regardless of their population, would be represented equally in the Senate. This clash between proportional versus equal representation provoked the most contentious debate at the Constitutional Convention and nearly led to its end. Delegate Luther Martin of Maryland wrote that differences over the issue "nearly terminated in a dissolution of the Convention." George Washington wrote to Alexander Hamilton that he "almost despaired" that the small and large states would ever resolve their differences. In the end, the Great Compromise granted each side in the dispute a chamber where their interests could be protected and guaranteed. House seats would be apportioned among the states based on population, with each state guaranteed at least one Member; Representatives would be directly elected by the people. By contrast, the Senate would be composed of two senators per state--regardless of population--indirectly elected by the state legislatures. As James Madison wrote in Federalist No. 39 , "The House of Representatives will derive its powers from the people of America .... The Senate, on the other hand, will derive its powers from the States, as political and co-equal societies; and these will be represented on the principle of equality in the Senate." The principle of two Senators from each state was further guaranteed by Article V of the Constitution: "no State, without its Consent, shall be deprived of equal Suffrage in the Senate." Decisions made at the Constitutional Convention about the Senate still shape its organization and operation today, and make it one of the most distinctive legislative institutions in the world. As William E. Gladstone, four-time British Prime Minister during the 19 th century, said about the American Senate, it is a "remarkable body, the most remarkable of all the inventions of modern politics." Plainly, the Framers did not want the Senate to be another House of Representatives. The institutional uniqueness of the Senate flows directly from many of the decisions made at the Constitutional Convention. Several of these features merit discussion, because they highlight important and enduring features of the Senate. These features include constituency, size, term of office, and special prerogatives. The one modification to the plan not foreseen by the Framers was the direct election of Senators. The "one state-two Senator" formula means that most senators represent constituencies that are more heterogeneous than the districts represented by most House members. One result is that Senators must accommodate a larger diversity of interests and voices in their representational roles. For example, a House member might represent a district that is overwhelmingly agriculture in character. The Senators from that state focus on agriculture, too, but they must also be responsive to a wider array and diversity of interests. The bottom line is that Senators represent an entire state, not a part of it. Because the votes of Senators are equal, balloting power in the Senate is not apportioned by population. As various scholars have pointed out: "The nine largest states are home to 51 percent of the population but elect only 18 percent of the Senate; the twenty-six smallest states control 52 percent of the Senate but hold only 18 percent of the population." The disparity in the voting strength of Senators from lightly versus heavily populated states prompted the late Senator Daniel Moynihan, D-N.Y., to predict that sometime "in the twenty-first century the United States is going to have to address the question of apportionment in the Senate." From the outset the Senate's membership was relatively small compared to the House. When the Senate first convened in 1789, there were twenty-two Senators. North Carolina and Rhode Island soon entered the Union to increase the number to twenty-six. As new states entered the Union, the Senate's size expanded to the 100 that it is today. The Senate's size significantly shapes how it works. For example, it operates in a generally informal manner, often relying on the unanimous consent of all 100 senators to function. There is large deference to minority views--either those of the minority party, a small group of lawmakers, or a single senator. The Senate's formal rules and precedents are less comprehensive than the many detailed rules and voluminous precedents of the larger House of Representatives. Viewed as "ambassadors" from the several states, the seed was planted early that senators should have few restraints placed on their parliamentary rights. For example, in 1789, the Senate informally "adopted a policy of keeping formal rules to a minimum," agreeing to twenty short rules. Further, in framing its rules, the Senate "quite naturally put a great premium on ease and dignity of speech." The Senate grants every Member two parliamentary freedoms that, so far as is known, no other lawmaker worldwide possesses. These two freedoms are unlimited debate and an unlimited opportunity to offer amendments, including non-relevant amendments. Both prerogatives are, of course, subject to certain constraints. As two Senate parliamentarians wrote, "Whereas Senate Rules permit virtually unlimited debate, and very few restrictions on the right to offer amendments, these [unanimous consent] agreements usually limit debate and the right of Senators to offer amendments." Unanimous consent agreements establish a tailor-made procedure for considering virtually any kind of business that the Senate takes up. They are commonly drafted by the parties' floor leaders and managers and, to be implemented, must be agreed to by the entire Senate membership (that is, not objected to by any senator.) Two fundamental objectives of these accords are to limit debate and to structure the amendment process. It was the smaller size of the Senate that no doubt encouraged these parliamentary traditions to emerge and flourish. Not until 1917 did the Senate even adopt a method for ending extended debate (called a "filibuster" if employed for dilatory purposes.) It was called cloture (closure of debate) and its procedural requirements are spelled out in Senate Rule XXII. So from 1789 to 1917 there was no way for the Senate to terminate extended debates except by unanimous consent, compromise, or exhaustion. A key goal of the Framers, as noted earlier, was to create a Senate differently constituted from the other chamber so that it could check the popular passions that might overly influence legislation emanating from the directly elected House. To foster values such as deliberation, reflection, and continuity, the Framers made three important decisions. First, they set the senatorial term of office at six years even though the duration of a Congress is two years. The Senate is a "continuing body" with only one-third of its membership up for election at any one time. As Article I, section 3, states: "Immediately after they shall be assembled in consequence of the first election, they shall be divided as equally as may be into three classes." Consequently, the electorate that chooses the one-third up in November 2008 is different in various ways--in regard to the array of salient issues that may influence peoples' choices, for example--from the voters who selected the other two-thirds of the Senate. These lawmakers were influenced, respectively, by the public mood of the voters in November 2004 and 2006; thus, some of them might act collectively as a "brake" and block or slow down floor consideration of issues debated during the 2008 campaigns. Second, to be a Senator, individuals must meet certain constitutional qualifications. For example, to hold office, Senators must be 30 years of age and nine years a citizen; House members are to be 25 years of age and seven years a citizen. The Framers expected Senators to be more seasoned and experienced than House members. Whether this expectation has been met is problematic, even in Congress's earliest years when the likes of James Madison and Albert Gallatin served in the House. Unlike House members, the selection of senators was done by the state legislatures, which bolstered the states' role as a counterweight to the national government and insulated the Senate from popular pressures. The House and Senate share lawmaking authority, but the Framers assigned special "advice and consent" prerogatives exclusively to the Senate. Under Article II, section 2, the Senate functions as a unicameral body when it considers (1) the ratification of treaties, which require approval by a two-thirds vote, or (2) presidential nominations for high governmental positions such as Federal judges, ambassadors, or Cabinet officers (all of whom require Senate consent by a majority vote). The Framers assigned the advice and consent responsibilities to the Senate (but not the House) because of certain characteristics embedded in that institution, such as stability, a longer time perspective, and its smaller size. As one of the Framers (Pierce Butler of South Carolina) noted, treaty negotiations "always required the greatest secrecy, which could not be expected in a large body" like the House. The Senate's role in the appointments process, wrote Hamilton in Federalist No. 65 , would serve as "an excellent check upon the spirit of favoritism in the President, and would tend greatly to preventing the appointment of unfit characters from State prejudice." The Constitution (Article I, section 3) also grants the Senate the "sole Power to try all Impeachments." The House possesses the constitutional authority to decide by majority vote whether to impeach (or indict) executive or judicial officials while the Senate, by a two-thirds vote, determines whether to convict the indicted public officials, which could even include the president. "Where else," wrote Hamilton in Federalist No. 65 , "than in the Senate could have been found a tribunal sufficiently dignified, or sufficiently independent? What other body would be likely to feel confidence enough in its own situation , to preserve unawed and uninfluenced the necessary impartiality between an individual accused, and the representatives of the people, his accusers? " (Italics in the original.) The Senate, like any legislative institution, constantly changes in big and little ways. If the Framers returned today to visit the Senate, they would surely recognize that it remains the preeminent legislative forum for protecting minority rights and for debating and refining the great issues of the day. They would continue to find that many of their fundamental principles--two Senators from each state, the advice and consent role, or the impeachment prerogative--continue to govern the Senate's composition and activity. To be sure, they would likely be awe-struck by the country's many changes: the demographic diversity among the 50 states; the size and reach of the federal establishment; the rise of presidential power; the cost of campaigns; the role of political parties; the extent of the nation's international obligations; and numerous other societal, technological, or medical developments. They would soon discover a significant change to their handiwork, however: today's Senators no longer are elected by state legislatures. In 1913 the Seventeenth Amendment to the Constitution was ratified providing for the direct election of Senators. The Framers would probably view this as the most significant constitutional change affecting the Senate. The election of Senators by state legislatures lasted for more than 125 years until the two institutions that were vested politically in the procedure--the U.S. Senate and the state legislatures--opted for the popular election of Senators. Why? Two words epitomize the fundamental drivers of the change: democracy and deadlock. The direct election of Senators was triggered by the Progressive movement of the 1890s and early 1900s which advocated an agenda of democratic reform, such as women's suffrage, the direct primary, and the direct election of senators. Progressive leaders wanted to end the influence of powerful special interests, especially corporations, over state legislatures; block the purchase of Senate seats; blunt the influence of party bosses in determining who state lawmakers should select; and make senators directly answerable to the people for their actions or inactions. For example, the spread of direct primaries in many states "led to voters expressing their choice for senator on the primary ballot. Although not legally binding on the legislatures, the popular choice was likely to be accepted." The second major stimulus for the Seventeenth Amendment involved the often contentious state legislative deadlocks in electing Senators. Various factors provoked the deadlocks, such as different party control of the two chambers, and lengthy contests among as many as 80 or more senatorial candidates, with balloting extending over several weeks. As a scholar of the Senate reported, the "record of senatorial elections for the fifteen years, 1891 to 1905, shows forty-five such deadlocks--from one to seven in each of twenty states." The combination of these two forces--the democratic impulse and disgruntlement with deadlocks--led to congressional passage of a direct election constitutional amendment in May 1912. Ratification by three-fourths of the state legislatures occurred a year later. To close, as British Prime Minister Gladstone said, the Senate is a "remarkable body." Many senators throughout history have shared his view. As Senator Claude Pepper, D-FL, said in 1939, on the occasion of the Senate's 150 th anniversary: The varied and extraordinary functions and powers of the Senate make it, according to one's view, a hydra-headed monster, or the citadel of constitutional and democratic liberties. Like democracy itself, the Senate is inefficient, unwieldy, inconsistent; it has its foibles, its vanities, its Members who are great, the near great, and those who think they are great. But, like democracy also, it is strong, it is sound at the core, it has survived many changes, it has saved the country from many catastrophes, it is a safeguard against any form of tyranny which ... might tend to remove the course of Government from persistent public scrutiny. In the last analysis it is probably the price we in America have to pay for liberty.

Decisions made at the Constitutional Convention about the Senate still shape its organization and operation today. Several of these features merit discussion, because they highlight important and enduring characteristics of the Senate. These aspects include constituency, size, term of office, and special prerogatives. In addition, this report identifies a major constitutional change that the Founding Fathers could not foresee: the direct election of Senators.

The Arab League, or League of Arab States, is an umbrella organization comprising 22 Middle Eastern and African countries and entities. Arab League members are Algeria, Bahrain, Comoros, Djibouti, Egypt, Iraq, Jordan, Kuwait, Lebanon, Libya, Mauritania, Morocco, Oman, the Palestinian Authority, Qatar, Saudi Arabia, Somalia, Sudan, Syria, Tunisia, the United Arab Emirates, and Yemen. The Arab League was founded in 1944, and in 1945 began a boycott of Zionist goods and services in the British controlled mandate territory of Palestine. In 1948, following the war establishing Israel's independence, the boycott was formalized against the state of Israel and broadened to include non-Israelis who maintain economic relations with Israel or who are perceived to support it. The boycott is administered by the Central Boycott Office, a specialized bureau of the Arab League based in Damascus but believed for many decades to be operating out of Cairo, Egypt. The U.S. government has often been at the forefront of international efforts to end enforcement of the boycott and to seek the Arab League's revocation of it. The U.S. government participates in bilateral and multilateral negotiations with Arab League members regarding the boycott. U.S. legislative action related to the boycott dates from 1959 and includes multiple statutory provisions expressing U.S. opposition to the boycott, usually in foreign assistance legislation. In 1965, Congress adopted mandatory reporting of any requests by Arab League member countries to U.S. companies to participate in the boycott. In 1977, Congress passed laws making it illegal for U.S. companies to cooperate with the boycott and authorizing the imposition of civil and criminal penalties against U.S. violators. According to the Department of Commerce, participation in the boycott includes Agreements to refuse or actual refusal to do business with or in Israel or with blacklisted companies; Agreements to discriminate or actual discrimination against other persons based on race, religion, sex, national origin, or nationality; Agreements to furnish or actual furnishing of information about business relationships with or in Israel or with blacklisted companies; and/or Agreements to furnish or actual furnishing of information about the race, religion, sex, or national origin of another person. Lastly, U.S. taxpayers who cooperate with the boycott are subject to the loss of tax benefits that the U.S. government provides to exporters. These benefits include, among others, the foreign tax credit and the tax deferral available to U.S. shareholders of a controlled foreign corporation (CFC). The boycott has three tiers. The primary boycott prohibits citizens of an Arab League member from buying from, selling to, or entering into a business contract with either the Israeli government or an Israeli citizen. The secondary boycott extends the primary boycott to any entity world-wide that does business with Israel. A blacklist of global firms that engage in business with Israel is maintained by the Central Boycott Office, and disseminated to Arab League members. The tertiary boycott prohibits an Arab League member and its nationals from doing business with a company that in turn deals with companies that have been blacklisted by the Arab League. The boycott also applies to companies that the Arab League identifies as having "Zionist sympathizers" in executive positions or on the board of the company. According to one analyst, the "nature and detail of these rules reflect the boycotting countries' tolerance for only the most minimal contacts with Israel." The Arab League does not enforce the boycott and boycott regulations are not binding on member states. However, the regulations have been the model for various laws implemented by member countries. The League recommends that member countries demand certificates of origin on all goods acquired from suppliers to ensure that such goods meet all aspects of the boycott. Overall enforcement of the boycott by member countries appears sporadic. Some Arab League members have limited trading relations with Israel. The Arab League does not formally or publicly state which countries enforce the boycott and which do not. Some Arab League member governments have maintained that only the Arab League, as the formal body enforcing the boycott, can revoke the boycott. However, adherence to the boycott is an individual matter for each Arab League member and enforcement varies by state. There are indications that some Arab League countries publicly support the boycott while continuing to quietly trade with Israel. According to Doron Peskin, head of research at InfoProd, a consulting firm for foreign and Israeli companies specializing in trade with Arab states, "the Arab boycott is now just lip service." This sentiment has been echoed by Arab officials, albeit anonymously. One official commented to the Egyptian newspaper Al-Ahram that, "boycotting Israel is something that we talk about and include in our official documents but it is not something that we actually carry out--at least not in most Arab states." Others assert that enforcement of the boycott waxes and wanes with the level of intensity of the Israeli-Palestinian issue. The Arab League has acknowledged that U.S. pressure has affected its ability to maintain the boycott. At the May 2006 Arab League conference on the boycott, one conference participant reportedly said, "The majority of Arab countries are evading the boycott, notably the Gulf states and especially Saudi Arabia." He added that a major reason for these countries bypassing the boycott is "growing U.S. pressures in the direction of normalization with the Jewish state." Some states and entities have formally ended their adherence to the boycott, or at least some aspects of it. Egypt (1979), the Palestinian Authority (1993), and Jordan (1994) signed peace treaties or agreements that ended their respective adherence to the boycott. Mauritania, which never applied the boycott, established diplomatic relations with Israel in 1999. Algeria, Morocco, and Tunisia do not enforce the boycott. In 1994, the member countries of the Gulf Cooperation Council (GCC)--Bahrain, Kuwait, Oman, Qatar, Saudi Arabia, and the United Arab Emirates--announced that they would only enforce the primary boycott. In 1996, the GCC states recognized that total elimination of the boycott is a necessary step for peace and economic development in the region. However, U.S. companies continue to receive requests to cooperate with the boycott from GCC member countries. Lebanon enforces the primary, secondary, and tertiary boycotts. According to the Office of the United States Trade Representative (USTR), some member states of the 57-member Organization of the Islamic Conference (OIC), headquartered in Saudi Arabia, also enforce a boycott against Israel. For example, Bangladesh imposes a primary boycott on trade with Israel. By contrast, other OIC members, such as Tajikistan, Turkmenistan, and Kazakhstan impose no boycott and have encouraged trade with Israel at times. Since the boycott is sporadically applied and ambiguously enforced, its impact, measured by capital or revenue denied to Israel by companies adhering to the boycott, is difficult to measure. The effect of the primary boycott appears limited since intra-regional trade and investment are small. Nonetheless, there is some limited trade between Israel and its Arab neighbors. As Figure 1 illustrates, Israel's regional trade is negligible compared to Israel's trade with the United States, China, and other large trading partners. Enforcement of the secondary and tertiary boycotts has decreased over time, reducing their effect. A 1996 study by researchers at Tel Aviv University looked at the effect of the Arab boycott on the Israeli economy through the automobile market. Following a relaxation of boycott enforcement in the late 1980s through the early 1990s, Asian countries began exporting cars to Israel. The study found that if the boycott had continued to be enforced, and these cars did not enter the Israeli market, the Israeli car market would have been 12% smaller--leading to a $790 price increase per car. Total welfare loss for the study year, 1994, would have been an estimated $89 million. Thus, it appears that since intra-regional trade is small, and that the secondary and tertiary boycotts are not aggressively enforced, the boycott may not currently have an extensive effect on the Israeli economy. Despite the apparent lack of economic impact on either Israeli or Arab economies, the boycott remains of strong symbolic importance to all parties. Many Arab countries want to deny normalization with Israel until there is a final resolution to the conflict in the Palestinian territories. Israel, on the other hand, has asserted that it wants to be accepted in the neighborhood both in political terms and as a source of, and target for, foreign investment. The U.S. government officially opposes the boycott and works to end its enforcement on multiple levels. For many years, language has been included in successive foreign operations appropriations legislation concerning the boycott. Most recently, Section 7035 of the Consolidated and Further Continuing Appropriations A ct, FY 201 7 ( P.L. 115-31 ) states that it is the sense of Congress that 1. the Arab League boycott of Israel, and the secondary boycott of American firms that have commercial ties with Israel, is an impediment to peace in the region and to U.S. investment and trade in the Middle East and North Africa; 2. the Arab League boycott, which was regrettably reinstated in 1997, should be immediately and publicly terminated, and the Central Office for the Boycott of Israel immediately disbanded; 3. all Arab League states should normalize relations with their neighbor Israel; 4. the President and the Secretary of State should continue to vigorously oppose the Arab League boycott of Israel and find concrete steps to demonstrate that opposition by, for example, taking into consideration the participation of any recipient country in the boycott when determining to sell weapons to said country; and 5. the President should report to Congress annually on specific steps being taken by the United States to encourage Arab League states to normalize their relations with Israel to bring about the termination of the Arab League boycott of Israel, including those to encourage allies and trading partners of the United States to enact laws prohibiting businesses from complying with the boycott and penalizing businesses that do comply. The United States passed antiboycott legislation in the late 1970s to discourage U.S. individuals from cooperating with the secondary and tertiary boycotts. Antiboycott laws apply to "U.S. exports and imports, financing, forwarding and shipping, and certain other transactions that may take place wholly offshore." Although U.S. legislation and practices were designed to counteract the Arab League boycott of Israel, in practice, they apply to all non-sanctioned boycotts. According to the Department of Commerce's Office of Antiboycott Compliance, the legislation was enacted to "encourage, and in specified cases, require U.S. firms to refuse to participate in foreign boycotts that the United States does not sanction. They [the legislation] have the effect of preventing U.S. firms from being used to implement foreign policies of other nations which run counter to U.S. policy." U.S. regulations define cooperating with the boycott as (1) agreeing to refuse or actually refusing to do business in Israel or with a blacklisted company; (2) agreeing to discriminate or actually discriminating against other persons based on race, religion, sex, national origin, or nationality; (3) agreeing to furnish or actually furnishing information about business relationships in Israel or with blacklisted companies; and (4) agreeing to furnish or actually furnishing information about the race, religion, sex, or national origin of another person. U.S. antiboycott laws are included in the Export Administration Act of 1979 (EAA) and the Ribicoff Amendment to the Tax Reform Act of 1976 (TRA). The export-related antiboycott provisions are administered by the Department of Commerce and prohibit U.S. persons from participating in the boycott. The Internal Revenue Service (IRS) administers tax-related antiboycott regulations that deny tax benefits to U.S. taxpayers that participate in the boycott. Regulations promulgated under Section 8 of the EAA prohibit any U.S. person or company from complying with an unsanctioned foreign boycott and require them to report requests they have received to comply with a boycott. Such requests must be reported quarterly to the Department of Commerce's Office of Antiboycott Compliance (OAC) in the Bureau of Industry and Security (BIS). These regulations are implemented in part 760 of the Department of Commerce's Export Administration Regulations (EAR). The EAA prescribes penalties that may be imposed for violation of the antiboycott regulations. Criminal penalties for each "knowing" violation of the antiboycott regulations are a fine of up to $50,000 or five times the value of the exports involved, whichever is greater, and imprisonment of up to five years. During periods when the EAR are continued in effect by an Executive Order issued pursuant to the International Emergency Powers Act (IEEPA), the criminal penalties for each willful violation can be a fine of up to $50,000 and imprisonment for up to 10 years. Administrative penalties may also be levied. For each violation of the EAR any or all of the following may be imposed: General denial of export privileges; The imposition of fines of up to $11,000 per violation; and/or Exclusion from practice. When the EAR are continued under IEEPA, penalties for violations of the antiboycott regulations may be imposed as follows: up to the greater of $250,000 per violation or twice the value of the transaction for administrative violations, and up to $1 million and 20 years imprisonment per violation for criminal violations. In July 2007, BIS amended existing penalty guidelines to introduce a voluntary disclosure program that could reduce a potential fine levied on an exporter if it voluntarily discloses its violation of U.S. antiboycott laws. For the disclosure to have a mitigating effect, notification must take place prior to BIS learning about the violation from other sources and commencing an investigation. The new guidelines also created a new supplement no. 2 to the antiboycott provisions that more clearly describes how BIS investigates violations of U.S. antiboycott laws and determines penalty rates. The Ribicoff Amendment to the TRA added Section 999 to the Internal Revenue Code. This section denies various tax benefits normally available to exporters if they participate in the boycott. In addition, the IRS requires U.S. taxpayers to report operations in, with, or related to countries that the Department of the Treasury includes on its annual list of countries that may require participation in an international boycott, and with any other country from which they receive a request to participate in a boycott. The current list of countries that request U.S. companies to participate or agree to participate in boycotts prohibited under U.S. law includes Iraq, Kuwait, Lebanon, Libya, Qatar, Saudi Arabia, Syria, United Arab Emirates, and Yemen. The list remains unchanged since Iraq was added to the list of boycotting countries in August 2012. Denying tax benefits to U.S. firms that participate in the boycott appears to be an effective antiboycott strategy. According to a 1990s study, U.S. legislation had reduced overall participation in the boycott by U.S. taxpayers by between 15% and 30%. However, the effectiveness of U.S. antiboycott tax legislation may have diminished somewhat since the U.S. government is reducing export tax benefits that are available to U.S.-based companies to comply with World Trade Organization (WTO) rulings. A "BDS" (boycott, divestment, and sanctions) movement against Israel--ostensibly linked to its treatment of Palestinians--has gained support among civil society organizations in a range of countries. Some divestment from and boycotts of Israel or Israeli goods have resulted. For example, the American Studies Association, a scholarly organization devoted to the interdisciplinary study of American culture and history, voted for an academic boycott of Israeli institutions in December 2013, amplifying the controversy surrounding the issue with lawmakers and with U.S. higher education institutions and student councils. Some who oppose BDS measures against companies in Israel because of concerns that the movement's demands could endanger Israel's identity as a Jewish state nevertheless support efforts to divest from Israeli companies doing business in West Bank settlements. Additionally, some European countries' pension funds and companies have withdrawn investments or canceled contracts owing to concerns regarding connections with settlement activity. However, some reports have questioned whether such developments are properly characterized as constituting a boycott or a significant threat to Israel's economy. Extending existing U.S. antiboycott measures to incorporate the BDS movement raises several challenges. To the extent a U.S. organization may participate in the BDS movement, it would not appear to violate existing federal antiboycott legislation, which targets organizations' participation in foreign boycotts. Foreign states do not directly participate in the BDS movement, and the movement does not have a secondary tier targeting companies that do business in or with Israel. It appears, rather, to essentially be an informal grouping of civil society organizations--originating among Palestinians but subsequently expanding into other countries--making common cause rather than exercising economic pressure on companies to participate. U.S. legislation similar to the 2011 Israeli "Anti-Boycott Law," which instituted civil penalties for Israeli citizens who organize or publically endorse boycotts against Israel, would probably be vulnerable to challenge on free speech (First Amendment) grounds.

The Arab League, an umbrella organization comprising 22 Middle Eastern and African countries and entities, has maintained an official boycott of Israeli companies and Israeli-made goods since the founding of Israel in 1948. The boycott is administered by the Damascus-based Central Boycott Office, a specialized bureau of the Arab League. The boycott has three tiers. The primary boycott prohibits citizens of an Arab League member from buying from, selling to, or entering into a business contract with either the Israeli government or an Israeli citizen. The secondary boycott extends the primary boycott to any entity world-wide that does business in Israel. A blacklist of global firms that engage in business with Israel is maintained by the Central Boycott Office, and disseminated to Arab League members. The tertiary boycott prohibits an Arab League member and its nationals from doing business with a company that deals with companies that have been blacklisted by the Arab League. Since the boycott is sporadically applied and ambiguously enforced, its impact, measured by capital or revenue denied to Israel by companies adhering to the boycott, is difficult to measure. The effect of the primary boycott appears limited since intra-regional trade and investment are small. Enforcement of the secondary and tertiary boycotts has decreased over time, reducing their effect. Thus, it appears that since intra-regional trade is small, and that the secondary and tertiary boycotts are not aggressively enforced, the boycott may not currently have an extensive effect on the Israeli economy. Despite the lack of economic impact on either Israeli or Arab economies, the boycott remains of strong symbolic importance to all parties. The U.S. government has often been at the forefront of international efforts to end the boycott and its enforcement. Despite U.S. efforts, however, many Arab League countries continue to support the boycott's enforcement. U.S. legislative action related to the boycott dates from 1959 and includes multiple statutory provisions expressing U.S. opposition to the boycott, usually in foreign assistance legislation. In 1977, Congress passed laws making it illegal for U.S. companies to cooperate with the boycott and authorizing the imposition of civil and criminal penalties against U.S. violators. U.S. companies are required to report to the Department of Commerce any requests to comply with the Arab League Boycott. This report provides background information on the boycott and U.S. efforts to end its enforcement. More information on Israel is contained in CRS Report R44281, Israel and the Boycott, Divestment, and Sanctions (BDS) Movement, coordinated by Jim Zanotti.

Since embarking on a road of free market reforms nearly three decades ago, China has been one of the world's fastest growing economies. The actual size of China's economy has been a subject of extensive debate among economists. China reports that its 2005 gross domestic product (GDP) was 18.4 trillion yuan. Using average annual nominal exchange rates (at 8.2 yuan per dollar) yields $2.2 trillion, equal to less than one-fifth the size of the U.S. economy. China's per capita GDP (a common measurement of living standards) in nominal dollars was $1,761, or 4.2% of U.S. levels. These data would indicate that China's economy and living standards in 2005 were vastly below U.S. levels. However, economists contend that these figures are very misleading. First, nominal exchange rates only reflect the price of currencies in international markets, which can vary greatly over time. Secondly, some exchange rate mechanisms, such as between the dollar and the Chinese yuan, may be significantly distorted by foreign government intervention. Finally, nominal GDP data fail to reflect differences in prices that exist across nations. Surveys indicate that prices in developing countries (such as China) are generally much lower than they are in developed countries (such as the United States and Japan), especially for non-traded goods and services. Thus, a measurement of a developing country's GDP expressed in nominal U.S. dollars will likely understate (often significantly) the actual level of goods and services that GDP can buy domestically. Economists have attempted to factor in national price differentials by using a purchasing power parity (PPP) measurement, which converts foreign currencies into a common currency (usually the U.S. dollar) on the basis of the actual purchasing power of those currencies (based on surveys of the prices of various goods and services) in each respective country. In other words, the PPP data attempt to determine how much local currency (yuan, for example) would be needed to purchase a comparable level of goods and services in the United States per U.S. dollar. This "PPP exchange rate" is then used to convert foreign economic data in national currencies into U.S. dollars. One of the largest PPP projects in the world is the International Comparison Program (ICP), which is coordinated by the World Bank. The ICP collects price data on more than 1,000 goods and services in 146 countries and territories (and makes estimates of 39 others). Prior to December 2007, data from the ICP and various private economic forecasting firms all seemed to agree that China's economy, measured on a PPP basis, was close to $9 trillion in 2005, ranking it as the world's second-largest economy, after the United States. Based on these estimates, and projections of continued rapid economic growth, many analysts predicted that China's economy would surpass that of the United States within a few years. Such projections helped fuel the growing debate over whether China posed an economic threat to the United States. However, newly revised PPP data released by the World Bank in December 2007 purport to show that China's economy in 2005 was 40% smaller than previously estimated. The ICP's previous 2005 PPP estimate of China's GDP (hereinafter referred to as ICP 1 ) at $8.8 trillion fell to $5.3 trillion (down by $3.3 trillion) under the ICP revision (hereinafter referred to as ICP 2 revision ). In addition, China's per capita GDP on a PPP basis dropped from $6,765 to $4,091 (see Table 1 ). The size of China's GDP relative to that of the United States fell from 71.3% under ICP 1 to 43.1% under ICP 2 revision , while per capita GDP relative to the United States dropped from 16.2% to 9.8%. Finally, the new revision decreased China's 2005 share of world GDP from 14.2% to 9.7% (the U.S. share rose from 20.5% to 22.5%). According to the ICP, the major difference between the old and new estimates of China's economy is that the latter reflects, for the first time, the inclusion of recent price survey data provided by China. Previously, the ICP estimated China's PPP data based on a 1986 comparative survey of prices in the United States and China and subsequent extrapolations of that data. ICP 2 revision significantly increased price level estimates within China's economy. The new data estimated that Chinese prices were on average 42% of U.S. levels (compared to 26% under the previous estimate), which is reflected in the change in the estimate of China's PPP exchange rate from 2.1 yuan to the dollar to 3.4. The revised data indicate it will likely take many more years than previously thought before China's GDP and living standards reach U.S. levels. Although China's access to assistance and loans from international development agencies may be unaltered by the ICP PPP revision, the data may directly or indirectly effect China's economic policies and its attitudes in international trade discussions. China may attempt to use the PPP revisions to boost its claim that it is a "poor" country and that, given its development needs and large numbers of people living in poverty, it should not be pressed to adopt economic reforms (such as changes to its currency policy) that could prove disruptive, or be expected to adopt policies that slow its economy, such as curtailing its energy use in response to international concerns over global climate change. As a recent article in The Economist put it, "China would probably be quite happy to see its GDP revised down, hoping that America might stop picking on a smaller, poorer economy." In February 2008, the World Bank stated that the ICP's revised estimate of China's PPP exchange rate data would affect its estimates of poverty levels in China, based on the daily cost of basic needs (estimated at roughly $1 PPP) and household surveys on consumption. The Bank estimates that the new PPP revisions would raise the estimated poverty rate in China in 2004 from 10% to 13-17%, or an increase from 130 million to between 169 to 221 million. Thus, previous estimates may have underestimated the number of Chinese living in poverty by up to 91 million people. Regardless of how China seeks to present the overall status of its economic development, commentators are speculating on the possible implications of the smaller GDP estimate of China for its socio-economic situation and policies, including: China ' s political stability may be weaker than previously thought --In the past, dissatisfaction with China's economic condition has lead to public unrest (e.g.--Spring 1989). The rising number of protests and demonstrations over the last few years may reflect, in part, the dissatisfaction of China's poor with their lack of economic progress. A 2005 article in People ' s Daily described China's growing income disparity as a "yellow alert" that could become a "red alert" in five years if the government failed to take proper actions. A 2005 United Nations report stated that the income gap between the urban and rural areas was among the highest in the world and warned that this gap threatened social stability. The report urged China to take greater steps to improve conditions for the rural poor, and bolster education, health care, and the social security system. The new PPP measurement may increase pressure within China to expand efforts to promote development in the rural areas where over 800 million people reside. According to a recent article in the Atlantic Monthly , some Chinese question why the government does not use its massive foreign exchange reserves to help alleviate poverty and respond to increasing income disparities across the country, rather than invest those funds overseas assets, such as in U.S. Treasuries. Such a reallocation of China's investment portfolio might have repercussions for the U.S. economy. Lower prospects for democracy --Prior to the release of the ICP revision report, some analysts had speculated that, once China reached a certain level of economic development and possessed a large and educated middle class, it would follow the examples of Taiwan and South Korea and begin to institute democratic reforms. The lower estimate of China's economy and living standards may dampen expectations in the West that China might soon move to adopt political reforms. Lower commitment to market reforms and trade liberalization --In an effort to reduce income disparities and improve conditions for China's poor, there may be a return to some of the "command economy" methods of the past. The recent decision to impose strict price controls on basic food items and other household necessities might be seen as a temporary retreat from market reforms. Finally, the ICP study may also alter how the U.S. government and the U.S. business community perceive China. The possible new view of China includes: Reevaluation of the Chinese government ' s budget --The PPP data may affect how U.S. policymakers evaluate China's spending levels on policies that affect U.S. policy. For example, the U.S. Defense Department's annual report on China's military spending includes conversions of China's budget data by the Chinese People's Liberation Army (PLA) from nominal U.S. dollars into PPP levels. The report estimated the PLA's 2003 budget in $30.6 billion in nominal dollars and $141 billion on a PPP basis. The World Banks's PPP revision could significantly decrease this estimate and other measurements of Chinese military spending as well as various public spending programs. Smaller export market potential --As a senior fellow at the Council on Foreign Relations wrote, "U.S. businesses and entrepreneurs hoping to crack the Chinese and Indian markets must come to terms with a middle class that is significantly smaller than thought. Companies with growth plans tied to the Indian and Chinese markets could face disappointing results." However, it is important to note the limitations of PPP estimates of GDP--and where and when they provide useful insight in economic analysis. Although the estimated size of China's economy decreases under the PPP revisions, other aspects on China's economy remain significantly large. For example, trade and international financial data are generally unaffected by the reduction in China's PPP GDP. It is estimated that in 2007, China overtook the United States to become the world's second-largest exporter (after the European Union). Similarly, in 2006 China was the world's fifth-largest recipient of foreign direct investment, the largest steel producer, the second-largest consumer of oil, and by some accounts, the largest emitter of carbon dioxide (CO2). In addition, since 2006, China has been the world's largest holder of foreign exchange reserves ($1.5 trillion at the end of 2007). Thus, despite the ICP results, China remains a major trade and economic power and a major potential global player in international finances and investment flows.

China's rapid economic growth since 1979 has transformed it into a major economic power. Over the past few years, many analysts have contended that China could soon overtake the United States to become the world's largest economy, based on estimates of China's economy on a "purchasing power parity" (PPP) basis, which attempts to factor in price differences across countries when estimating the size of a foreign economy in U.S. dollars. However, in December 2007, the World Bank issued a study that lowered its previous 2005 PPP estimate of the size of China's economy by 40%. If these new estimates are accurate, it will likely be many years before China's economy reaches U.S. levels. The new PPP data could also have an impact on U.S. and international perceptions over other aspects of China's economy, including its living standards, poverty levels, and government expenditures, such as on the military. This report will not be updated.

The number of children coming to the United States who are not accompanied by a parent or legal guardian is raising a host of policy questions. While much of the congressional interest initially focused directly on immigration policy, the implications for other areas, including education, are now arising as well. Under federal law, states and LEAs are required to provide all children with equal access to a public elementary and secondary education, regardless of their immigration status. Upon arrival in the United States, unaccompanied alien children generally are initially served through programs operated by the Department of Health and Human Services' (HHS's) Office of Refugee Resettlement (ORR). While in these programs, children are provided with basic education services and activities and are not enrolled in local school systems. However, once an unaccompanied alien child is released to an appropriate sponsor (e.g., parent, other family member, or other adult), the child has the right to enroll in a local school, just like any other child living in that area, even while awaiting immigration proceedings. In response to congressional interest in these issues, this report addresses possible sources of federal support for schools and local educational agencies that have enrolled unaccompanied alien children. It is not intended to provide a comprehensive review of all programs that could potentially serve these children. Rather, the first part of this report includes a discussion of three federal elementary and secondary education programs administered by the U.S. Department of Education (ED): (1) Title I-A Grants to Local Educational Agencies (LEAs) authorized by the Elementary and Secondary Education Act (ESEA), (2) English Language Acquisition Grants (Title III-A) authorized by the ESEA, and (3) Part B Grants to States authorized by the Individuals with Disabilities Education Act (IDEA) with an emphasis on how these programs could currently serve unaccompanied alien children or possibly be modified to increase support for these children. The second part of the report examines two programs that were previously administered by ED but are no longer funded. The first is the Emergency Immigrant Education Act (EIEA), which preceded the English Language Acquisition program. The second is the Temporary Emergency Impact Aid for Displaced Students program, which was enacted following Hurricanes Katrina and Rita to provide aid to states that enrolled elementary and secondary students who were displaced as a result of the storms. This program has been of particular interest to Congress because it provided aid on a short-term basis to schools and LEAs that experienced an unexpected influx of students. The next section of the report provides an overview of the Refugee School Impact Aid program administered by ORR, which funds activities aimed at the effective integration and education of refugee children. The last section of the report addresses the challenge of providing funds to LEAs and schools that are absorbing newly arriving unaccompanied children in light of the lack of local area data on the number of unaccompanied alien children that have been released from ORR custody. This section of the report includes ORR data on the number of unaccompanied alien children that have been released from ORR custody by county and state . There are several existing federal education programs administered by ED that could be used by LEAs to support the education of unaccompanied alien children upon their arrival and in subsequent years. The three largest programs that are most relevant to serving this student population include Title I-A Grants to LEAs authorized under the ESEA, English Language Acquisition Grants authorized under Title III-A of the ESEA, and Part B Grants to States authorized under the IDEA. These are not the only programs from which unaccompanied alien children could benefit or may be served, but they are some of the largest federal elementary and secondary programs, and given their aims, they may receive consideration as vehicles to provide assistance to schools and LEAs absorbing unaccompanied alien children. An overview of each program is provided below with a brief explanation of how the program is particularly relevant to unaccompanied alien children. Title I, Part A, of the ESEA authorizes federal aid to LEAs for the education of disadvantaged children. Title I-A grants provide supplementary educational and related services to low-achieving and other students attending pre-kindergarten through grade 12 schools with relatively high concentrations of students from low-income families. It has also become a "vehicle" to which a number of requirements affecting broad aspects of public K-12 education for all students have been attached as a condition for receiving Title I-A grants. For FY2014, the program was funded at $14.4 billion. Title I-A funds are allocated by the U.S. Department of Education (ED) to state educational agencies (SEAs), which then suballocate grants to LEAs. It is one of the few federal K-12 formula grant programs for which substate grants are, in most cases, calculated by ED. Portions of each annual appropriation for Title I-A are allocated under four different formulas--Basic, Concentration, Targeted, and Education Finance Incentive Grants--although funds allocated under all of these formulas are combined and used for the same purposes by recipient LEAs. Although the allocation formulas have several distinctive elements, the primary factors used in all four formulas are estimated numbers of children aged 5-17 in poor families plus a state expenditure factor based on average expenditures per pupil for public K-12 education. Within LEAs, Title I-A funds are used to provide supplementary educational services to students at public schools with the highest percentages or numbers of children from low-income families, as well as eligible students who live in the areas served by these public schools, but who attend private schools. While there are several program rules related to school selection, the participating schools must generally have a percentage or number of children from low-income families that is greater than the LEA's average. LEAs can generally choose to focus Title I-A services on selected grade levels (e.g., only in elementary schools), but they must usually provide services in all schools, without regard to their grade level, where the percentage of students from low-income families exceeds 75%. Once schools are selected, Title I-A funds are allocated among them on the basis of their number of students from low-income families. There are two basic types of Title I-A programs. Schoolwide programs are authorized if the percentage of low-income students served by a school is 40% or higher. In schoolwide programs, Title I-A funds may be used to improve the performance of all students in a school. For example, funds might be used to provide professional development services to all of a school's teachers, upgrade instructional technology, or implement new curricula. The other major type of Title I-A school service model is the targeted assistance program. This was the original type of Title I-A program, under which Title I-A-funded services are generally limited to the lowest achieving students in the school. For example, students may be "pulled out" of their regular classroom for several hours of more intensive instruction by a specialist teacher each week, or they may receive such instruction in an after-school program, or funds may be used to hire a teacher's aide who provides additional assistance to low-achieving students in their regular classroom. If an unaccompanied alien child enrolls in a school receiving Title I-A funds, the student may immediately be eligible for services, depending on the student's academic needs and the type of Title I-A program the school is operating. If the student remains in the school and is a low-income student, the student may eventually be included in the data used to determine Title I-A grants to schools and the estimates of the number of children living in families in poverty within the LEA. Title III-A was designed to help ensure that limited English proficient (LEP) students, including immigrant students, attain English proficiency, develop high levels of academic attainment in English, and meet the same state academic content and student academic achievement standards that all students are expected to meet. For the purposes of the English Language Acquisition program, "immigrant children and youth" are defined as individuals ages 3 through 21 who were not born in any state and have not been attending one or more schools in any one or more states for more than three full academic years. For FY2014, the program received $723 million. Formula grant allocations are made to states based on the proportion of LEP students and immigrant students in each state relative to all states. These amounts are weighted by 80% and 20%, respectively, resulting in a formula allocation based primarily on the number of LEP students in each state. States make subgrants to eligible entities (often LEAs) based on the relative number of LEP students in schools served by the eligible entity. States are also required to reserve up to 15% of the state allocation to make grants to eligible entities that have experienced a significant increase in the number of immigrant students enrolled in schools in the geographic area served by the eligible entity. States that are not reserving the full 15% of Title III-A funds to support LEAs that have experienced a significant increase in the number of immigrant students have the discretion to increase the percentage of funds reserved for this purpose. It should be noted that recent immigrant students could benefit from the funds set aside specifically for immigrant students as well as the majority of the funding provided under the English Language Acquisition program which focuses on increasing English language proficiency and student academic achievement in core academic subjects. Eligible entities receiving subgrants are required to use funds for two activities. Funds must be used to increase the English language proficiency of LEP students by providing high-quality instructional programs that are grounded in scientifically based research that demonstrates the program is effective in increasing English language proficiency and student academic achievement in core academic subjects. Funds must also be used to provide high-quality professional development to school staff or community-based personnel that work with LEP students. Eligible entities receiving grants from the funds reserved specifically for immigrant students are required to use these funds to support activities that "provide enhanced instructional opportunities" for immigrant students. If Congress wants to provide additional funds under the English Language Acquisition program to LEAs that have experienced a significant increase in the number of immigrant students, there are several options that could be considered. The overall program appropriation could be increased, which would increase state allocations (assuming all other factors remained constant). This would mean that the 15% reservation of funds would be based on a higher state allocation amount. Another option would be to increase the 15% cap on the percentage of funds that could be reserved to support such LEAs. However, this would leave less funding to support the LEP students (including immigrant students) served through the main program. Other options would be to change the underlying formula used to award grants to states to increase the weight given to immigrant students or use annual state data to determine the count of recent immigrant children and youth. This could result in some states receiving higher grant amounts and some states receiving lower grant amounts. IDEA Part B provides federal funding for the education of school-age children with disabilities and requires, as a condition for the receipt of such funds, the provision of a free appropriate public education (FAPE). FAPE involves the provision of specially designed instruction provided at no cost to parents that meets the needs of a child with a disability. IDEA contains procedural safeguards, which are provisions intended to protect the rights of parents and their children with disabilities regarding the provision of FAPE. In FY2014, IDEA Part B received $12.3 billion. To be covered under IDEA, a child with a disability must meet one or more of the categorical definitions of disability in the act, and the child must require special education and related services as a result of the disability in order to benefit from public education. Once a child meets IDEA's eligibility criteria, FAPE is implemented through an Individualized Education Program (IEP), which is the plan for providing special education, related services, and accommodations by the LEA. To receive services under IDEA, an unaccompanied alien child would first have to be identified as having or potentially having a disability that meets the IDEA eligibility criteria and subsequently be evaluated by the LEA to determine whether the child is a child with a disability and to determine the child's educational needs prior to the student being eligible for services under IDEA. That is, unaccompanied alien children would not be eligible for services under IDEA when they initially enroll in a school. If, however, as a result of the aforementioned evaluation process an unaccompanied alien child is determined to have met the IDEA eligibility criteria, the child is eligible for services under IDEA. In addition to the current federal education programs that may be useful in assisting LEAs in meeting the needs of recent immigrant students, there are other federal education programs administered by ED that are no longer funded that either focused on immigrant students (Emergency Immigrant Education Act) or have been used in the past to assist schools and LEAs experiencing an unexpected influx of students in elementary and secondary school (Temporary Emergency Impact Aid for Displaced Students). This program was formerly included in the ESEA (Title VII-C) and was eliminated when the English Language Acquisition program was enacted under the No Child Left Behind Act of 2002 ( P.L. 107-110 ). With respect to the need for the EIEA program, Congress found that "local educational agencies have struggled to fund adequately education services"; states have the responsibility to educate all students regardless of immigration status; and "immigration policy is solely a responsibility of the Federal Government." The program was designed to assist LEAs that experienced "unexpectedly large increases in their student population due to immigration" to provide high-quality instruction to these students, assist with their transition into American society, and help them to meet the challenging state performance standards expected of all children. Similar to the English Language Acquisition program, "immigrant children and youth" were defined as individuals ages 3 through 21 who were not born in any state and have not been attending school in any one or more states for more than three full academic years. Under the EIEA program, formula grants were awarded to states based on each state's proportional share of immigrant children and youth enrolled in public elementary and secondary schools served by an LEA and nonpublic elementary and secondary schools within the LEA. However, in determining the number of immigrant students, only immigrant students enrolled in LEAs in which (1) the LEA enrolled at least 500 of such children or (2) such children represented at least 3% of the total number of students enrolled in such public or nonpublic schools during the fiscal year were included in the state count. Immigrant students enrolled in LEAs that did not meet either of these criteria were not included in the determination of the state's grant amount. Funds provided under this program had to be used to pay for "enhanced instructional opportunities" for immigrant children and youth. While a comparable program to the EIEA could be developed to meet the needs of recent immigrant students, the reservation of funds for immigrant students under the English Language Acquisition program may already be addressing this aspect of providing assistance to such children. As previously discussed, the English Language Acquisition program includes provisions requiring states to reserve up to 15% of the state allocation to make grants to eligible entities that have experienced a significant increase in the number of immigrant students enrolled in schools in the geographic area served by the eligible entity. Similar to the EIEA program, these funds must be used to provide "enhanced instructional opportunities" for immigrant students. Following Hurricanes Katrina and Rita, Section 107 of P.L. 109-148 authorized the Secretary of Education (hereinafter referred to as the Secretary) to award Temporary Emergency Impact Aid for Displaced Students Grants to SEAs to enable them to award funds to eligible LEAs and Bureau of Indian Affairs (BIA)-funded schools for the education of students displaced by the natural disaster. Under the program, federal funding was made available to LEAs and schools on a per-student basis, irrespective of whether the school in which parents chose to enroll their child was a public or nonpublic school. Aid was limited to LEAs and schools serving students displaced by Hurricanes Katrina and Rita. Under the program, the Secretary was authorized to make four quarterly payments to SEAs, which in turn awarded funds to LEAs and BIA-funded schools on a per-student basis. A maximum of $6,000 was authorized per displaced student (and up to $7,500 per displaced student served under IDEA, Part B). If insufficient funds were available to pay the full amount which an LEA or BIA-funded school was eligible to receive, then awards were required to be proportionately reduced. LEAs and eligible BIA-funded schools were permitted to use these funds for the purpose of providing services and assistance to elementary and secondary schools enrolling displaced students during the 2005-2006 school year. LEAs serving areas in which displaced students enrolled in nonpublic schools prior to December 20, 2005, were required to deposit a proportionate amount of funds into student accounts on behalf of such students. Nonpublic schools, in turn, were able to access funds from student accounts for authorized uses. The amount to be deposited into each student account could not exceed the cost of tuition and fees at the nonpublic school a student attends. Nonpublic schools were also required to waive or reimburse tuition in order to access funds from student accounts. For FY2006, $645 million was appropriated. The program initially expired on August 1, 2006. P.L. 109-234 provided an additional $235 million for the program and extended the period of obligation until September 30, 2006, but only for expenses incurred during the 2005-2006 school year. Portions of the funds were provided to 49 states and the District of Columbia. LEAs, BIA-funded schools, and eligible non-public schools could use Temporary Emergency Impact Aid for Displaced Students program funds for the following purposes: paying the compensation of personnel, including teacher aides, in schools enrolling displaced students; identifying and acquiring curricular material, including the costs of providing additional classroom supplies, and mobile educational units and leasing sites or spaces; basic instructional services for such students, including tutoring, mentoring, or academic counseling; reasonable transportation costs; health and counseling services; and education and support services. These funds could not be used for construction or major renovations. Under the program, neither LEAs nor non-public schools were required to use funds exclusively to serve displaced students. While funds could be used specifically to serve displaced students, they could also be used for activities and services related to serving displaced students, such as educational programs or transportation services that benefit both displaced students and other students. SEAs were required to notify parents and guardians of displaced students that they had the option of enrolling their child in a public or non-public school; and that the aid provided under the program was temporary and only available for the 2005-2006 school year. The program contained no prohibition against non-public schools using federal funds received through student accounts to compensate personnel engaged in religious instruction or to purchase curricular materials and classroom supplies to be used in religious instruction. Funds were required to be deposited into student accounts only at the request of the parent or guardian of a displaced student. The parent or guardian of a displaced student had to be provided with the option of having their child opt out of religious worship or religious classes. While students were able to opt out of religious instruction, there did not appear to be any prohibition against funds made available on a child's behalf (at the request of the child's parent or guardian) being used for religiously oriented activities on a schoolwide basis. A comparable program could be developed to support SEAs, LEAs, or schools serving unaccompanied alien children. In order to create a similar program, however, states, LEAs, schools, or the ORR would need to identify how many eligible children were enrolled in schools in a given state or LEA. The ORR is responsible for the placement of unaccompanied alien children in appropriate custody and, therefore, may be best positioned to make these determinations. Various decisions regarding the program structure would also need to be made, including determining the program appropriation level, the period of time for which funds would be provided, whether higher grant amounts would be provided for unaccompanied alien children who are eligible for services under IDEA, and whether funds would be provided only on behalf of unaccompanied alien children attending public schools or also on behalf of unaccompanied alien children enrolled in private schools. There is one smaller program--not part of those funded by the U.S. Department of Education--that provides current funding for a portion of the unaccompanied alien children. Unaccompanied alien children who receive asylum are eligible for assistance through the Refugee School Impact Aid program. In 1980, Congress enacted the Refugee Education Assistance Act ( P.L. 96-422 ) only a few months after passing the landmark Refugee Act of 1980 established the ORR. Among other features, P.L. 96-422 authorized special impact aid to LEAs for the education of Cuban, Haitian, and Indochinese children who had sought refuge in the United States. The vestige of the Refugee Education Assistance Act exists today in ORR's Refugee School Impact Aid program, which funds activities aimed at the effective integration and education of refugee children. The most current report from ORR indicates this program provided grants totaling $15 million in FY2012 to state governments and nonprofit groups to assist local school systems impacted by significant numbers of refugee children. Unaccompanied alien children who have received asylum in the United States number 108 children through the third quarter of FY2014. Only two of these approved cases were for unaccompanied children apprehended in FY2014. All of the other approved cases were for unaccompanied children apprehended in prior years. As a consequence, the ORR's Refugee School Impact Aid program would not be a major source of funding unless Congress amended the law to include all, or additional classes of, unaccompanied alien children among those eligible for the assistance. Much as Congress specified in the law that the Cuban and Haitian Entrant children who were not deemed as refugees or asylees under the Immigration and Nationality Act were eligible for the Refugee Education Assistance Act, so too Congress might consider amending the provision to include unaccompanied alien children that ORR has temporarily released to a parent or sponsor. One of the principal challenges of providing funds to LEAs that are absorbing newly arriving unaccompanied children is the lack of local area data. The best available data from the ORR are county-level totals that do not indicate the age of the child. As many LEAs do not conform to county boundaries, any formula distributions would be approximate at best. Information on the specific schools that may be receiving the recent influx of unaccompanied children does not exist. ORR has begun releasing state-level data of unaccompanied alien children released to sponsors, and the most complete data available are from January 1, 2014, to July 31, 2014. A total of 37,477 unaccompanied alien children were released during this seven-month period. The data do not provide information on the child's country of birth or other demographic details. As Figure 1 shows, four states dominate among host homes for unaccompanied alien children: Texas, New York, California, and Florida. Table 1 presents the data that ORR has made publically available, beginning in January 1, 2014. Six counties have received over 1,000 unaccompanied alien children during the period January 1 to July 31, 2014: Harris, TX; Los Angeles, CA; Suffolk, NY; Miami-Dade, FL; Nassau, NY; and Fairfax, VA.

The number of children coming to the United States who are not accompanied by a parent or legal guardian is raising a host of policy questions. While much of the congressional interest initially focused directly on immigration policy, the implications for other areas, including education, are now arising as well. Under federal law, states and LEAs are required to provide all children with equal access to a public elementary and secondary education, regardless of their immigration status. Upon arrival in the United States, unaccompanied alien children generally are served initially through programs operated by the Department of Health and Human Services' (HHS's) Office of Refugee Resettlement (ORR). While in these programs, children are provided with basic education services and activities and are not enrolled in local school systems. However, once an unaccompanied alien child is released to an appropriate sponsor (e.g., parent, other family member, or other adult), the child has the right to enroll in a local school, just like any other child living in that area, even while awaiting immigration proceedings. While several federal education programs administered by the U.S. Department of Education (ED) provide funds that may be used by schools, local educational agencies (LEAs), and states to serve unaccompanied alien children, this report focuses on three ED programs that may be particularly helpful in providing support for these children: (1) Title I-A Grants to Local Educational Agencies (LEAs) authorized by the Elementary and Secondary Education Act (ESEA), (2) English Language Acquisition Grants (Title III-A) authorized by the ESEA, and (3) Part B Grants to States authorized by the Individuals with Disabilities Education Act (IDEA). In addition to current federal education programs that may be useful in assisting local education systems in meeting the needs of recent immigrant students, there are other federal education programs previously administered by ED that are no longer funded that either focused on immigrant students (Emergency Immigrant Education Act) or have been used in the past to assist schools and LEAs experiencing an unexpected influx of students in elementary and secondary school (Temporary Emergency Impact Aid for Displaced Students). In addition to these ED programs, ORR administers the Refugee School Impact Aid program administered by ORR, which funds activities aimed at the effective integration and education of refugee children. One of the principal challenges of providing federal funds to LEAs and schools that are absorbing newly arriving unaccompanied children is the lack of local area data. The best available data from ORR are county-level totals that do not indicate the age of the child. A discussion of these data and their limitations is included at the end of this report.

1. (back) Library of Congress (LOC), FederalResearch Division (FRD), Iraq: A Country Study , edited by Helen Chapin Metz, research completedMay 1988, p. 153; Copyright(C)United States Goverment as represented by the Secretary of the Army. 2. (back) World Bank, World DevelopmentIndicators (WDI) 2003. Note that the World Bank's WDI data does not appear to include adjustmentsfor 1991 war-related population loss as is done by the U.S. Bureau of the Census in their population series for Iraq. 3. (back) Average annual growth of cerealproduction between the periods 1969-71 and 1988-90. 4. (back) Kamil Mahdi, State and Agriculturein Iraq , "Chapter 1 -- The Agricultural Resources and Population of Iraq," Exeter Arab and IslamicStudies Series, Ithaca Press; copyright(c)Kamil A. Mahdi, 2000, p.12-13. 5. (back) Compton's InteractiveEncyclopedia , Copyright(c)1993, 1994 Compton's NewMedia, Inc.; and "Iraq," Microsofts(R)Encarta(R) 98Encyclopedia . (c)1993-1997 Microsoft Corp. 6. (back) Ibid., pp.17-18. 7. (back) Ibid., p.17. 8. (back) United Nations (UN), Food andAgriculural Organization (FAO), FAOSTAT. (A hectare equals about 2.47 acres.) 9. (back) Ahmad, Mahmood. "Agricultural PolicyIssues and Challenges in Iraq: Short- and Medium-term Options," from Iraq's EconomicPredicament , Kamil Mahdi, Editor. Exeter Arab and Islamic Studies Series, Ithaca Press,copyright©️Kamil Mahdi, 2002, p. 172. 10. (back) In the early 1990s, cultivated areatemporarily expanded to nearly 5.5 million hectares, due primarily to government incentives (seesection "Iraq's Agriculture in the post-gulf War Era: 1001-2002" of this report), before returning to under 4 million. 11. (back) U.N. FAO, FAOSTAT. 12. (back) Europa Publications, "Iraq: Agricultureand Food," from The Middle East and North Africa 2003 , 49th edition, pp 475. 13. (back) LOC, FRD, Iraq: A CountryStudy , "Chapter 3 -- The Economy: Industrialization," May 1988, p. 153 14. (back) Ahmad (2002), p. 170. 15. (back) Ibid., pp. 170-171. Note that 1 inchequals about 25.4 millimeters (mm). 16. (back) Mahdi (2000), p. 27. 17. (back) Agence France Presse, February 11,2003, copyright 2003 18. (back) IPR Strategic Business InformationDatabase, September 18, 2000. 19. (back) U.N. AQUASTAT, "Country Profile:Iraq," -- FAO's Information System on Water and Agriculture, Food and Water DevelopmentDivision, 1997 version. Note: 1 km 3 = 1 billion m 3 . 20. (back) Mahdi (2000), p. 19. 21. (back) U.N., FAO, AQUASTAT (1997), p. 22. (back) Ibid. 23. (back) Ibid. 24. (back) Mahdi (2000), p.16. 25. (back) Okin (undated). http://www.evsc.virginia.edu/~desert/ 26. (back) Iraq was part of the Ottoman Empirefrom the mid-1500s until 1920 when it became a British Mandate. At that time, Britain establisheda monarchy in Iraq. Independence was achieved by Iraq in 1932, but Britain retained a role in defense and foreignaffairs. A military coupin 1958 ended the monarchy and established Iraq as a republic. 27. (back) LOC, FRD, Iraq: A CountryStudy , "Land Tenure and Agrarian Reform," 1990. 28. (back) Kamil A. Mahdi, State andAgriculture in Iraq , Exeter Arab and Islamic Studies Series, Ithaca Press, copyright©️Kamil Mahdi,2000.p. 201. 29. (back) Europa Publications (2003), p. 474. 30. (back) LOC, FRD, Iraq: A CountryStudy , "Land Tenure and Agrarian Reform," 1990. 31. (back) Ibid. 32. (back) World Bank, World DevelopmentIndicators, 2003. 33. (back) Mahdi (2000), p.31. 34. (back) Springborg, Robert. "Infitah, AgrarianTransformation, and Elite Consolidation in Contemporary Iraq," The Middle East Journal , Vol.40, No. 1, Winter 1986, pp. 33-52. 35. (back) LOC, FRD, Iraq: A CountryStudy , 2000. 36. (back) Ibid., p. 32. 37. (back) Kurtzig, Michael E. and John B.Parker. "World Agriculture and Trade: Iraq," Agricultural Outlook , November 1980, pp. 18. 38. (back) Ibid. Springborg suggests that at leasta partial motivation for this behavior by Saddam was that, by weakening the Baath Partystructure, he was able to enhance his own power base within the Party. 39. (back) Ibid., p. 40-41. 40. (back) Chaudhry, Kiren Aziz, "ConsumingInterests: Market Failure and the Social Foundations of Iraqi Etatisme," from Iraq's EconomicPredicament , Kamil Mahdi, Editor. Ithaca Press, copyright©️Kamil Mahdi, 2002, pp. 245. 41. (back) Ahmad (2002), p. 184. 42. (back) Springborg (1986), p. 37. 43. (back) Chaudhry (2002), p. 245. 44. (back) Ibid., p. 247. 45. (back) Ahmad (2002), p. 191. 46. (back) USDA. January 1998. "Soil QualityResource Concerns: Salinization," Natural Resources Conservation Service, USDA. http://soils.usda.gov/sqi/files/Salinzation.pdf 47. (back) Springborg (1986), p. 38-39. 48. (back) Ahmad (2002), p. 184. 49. (back) Ibid., p. 40. 50. (back) Michiel Leezenberg,"Refugee Campor Free Trade Zone? The Economy of Iraqi Kurdistan since 1991," from Iraq's EconomicPredicament , Kamil Mahdi, Editor. Exeter Arab and Islamic Studies Series, Ithaca Press,copyright©️Kamil Mahdi, 2002, pp. 291. 51. (back) U.N., FAO, FAOSTAT. 52. (back) U.S. General Accounting Office(GAO), November 1990, p. 2. Note: under GSM-102 USDA's Commodity Credit Corporation (CCC)guarantees repayment for credit sales of three years or less; under GSM-103, CCC guarantees repayment for creditsales of more than threeyears but less than 10 years. 53. (back) IPR Strategic Business InformationDatabase, "Iraq: 9 Million Palm Trees Lost in Wars," December 13, 2000; copyright©️Info-Prod(Middle East) Ltd., 2000. 54. (back) FAOSTATS, FAO, United Nations. 55. (back) Library of Congress, FRD, Iraq:A Country Study , "The Economy -- Cropping and Livestock," p.162. 56. (back) FAOSTATS, FAO, United Nations. 57. (back) Ahmad, Mahmood. "AgriculturalPolicy Issues and Challenges in Iraq" Short- and Medium-term Options," from Iraq's EconomicPredicament , Kamil Mahdi, Editor. Ithaca Press, copyright©️Kamil Mahdi, 2002, pp. 179-180. 58. (back) For a discussion of Security Councilresolutions and requirements on Iraq, see CRS Issue Brief IB92117, Iraq: Weapons Programs,U.N. Requirements, and U.S. Policy . 59. (back) For a discussion of Security Councilresolutions related to the Oil-For-Food Program in Iraq, see CRS Report RL30472 , Iraq: Oil-For-FoodProgram, International Sanctions, and Illicit Trade ; and United Nations, Office of the Iraq Program -- Oil forFood; "About theProgram: In Brief." http://www.un.org/depts/oip/background/inbrief.html 60. (back) Parker, John, Michael Kurtzig, andTom Bickerton. "Iraq Faces Embargo," Agricultural Outlook , ERS, USDA, September 1990, pp.16.; and USDA "PSD online database." 61. (back) U.S. General Accounting Office. Iraq's Participation in U.S. Agricultural Export Programs , NSIAD-91-76, November 1990, p. 2. 62. (back) U.S. Bureau of the Census,International Data Base (IDB), Iraq, Oct. 10, 2002. 63. (back) A later section, "Agricultural Situationin Northern Iraq: 1991-2002," describes the agricultural sector in the 3 governorates of Kurdish-controlled northernIraq during the post-Gulf War period. 64. (back) Gazdar, Haris, and Athar Hussain,"Crises and Response: A Study of the Impact of Economic Sanctions in Iraq" Short- and Medium-term Options,"from Iraq's Economic Predicament , Kamil Mahdi, Editor, Ithaca Press, copyright©️Kamil Mahdi,2002, pp. 31-83. 65. (back) Ibid., p. 56-57. 66. (back) Ibid., p. 59. 67. (back) Ahmad (2002), p. 194 68. (back) IPR Strategic Business InformationDatabase, "Iraq: 9 Million Palm Trees Lost in Wars," December 13, 2000; copyright©️Info-Prod(Middle East) Ltd., 2000. 69. (back) Agence France Presse, "War, embargotake their toll on Iraq's palm trees," Baghdad, Iraq, December 4, 1994; copyright©️Agence FrancePresse 1994. 70. (back) Agence France Presse, "Iraqi date trade,pride of the nation, reeling under U.N. sanctions," Basra, Iraq, February 11, 2003;copyright©️Agence France Presse 2003. 71. (back) The problem for dates is even moreacute than simply reclaiming lost market share. Demand for dates in international markets is likelyquite inelastic -- i.e., not very price responsive. Therefore, any significant increase in supplies of dates oninternational markets is likelyto lead to substantially greater declines in the international market price. 72. (back) Gazdar and Hussain (2002), p. 62. 73. (back) These data should be viewed withcaution. Although they are from FAOSTAT, they reflect the data officially reported by the Iraqigovernment to the FAO. Rising usage rates may be more a reflection of declining area to which fertilizer is applied,rather than increasingwidespread availability. 74. (back) Ahmad (2002), p. 191. 75. (back) British Broadcasting Corporation(BBC), BBC Monitoring Middle East, "Iraq: Irrigation Ministry Official Says Current Drought WorstSince 1920s," June 8, 1999; Copyright©️1999 BBC. 76. (back) The Economist , "Diggingfor defeat: Iraq," May 2, 1998, Vol. 348, No. 8066, p.44. 77. (back) Ibid. 78. (back) Ibid., p. 44. 79. (back) United Nations Development Program(UNDP), Iraq Country Office, 1999-2000 Report, June 2000, p. 8. 80. (back) Ibid. 81. (back) USDA, PSD database, April 2003. Note that during 1960-69 annual cereal production per capita averaged 249 kilograms (kg). Thisfell to 177 kg/capita/year in the 1970s, and 130 in the 1980s, but had regained ground to 155 during the 1990-94period. 82. (back) U.N. Office of the Iraq Program,Oil-for-Food, Fact Sheet; http://www.un.org/depts/oip/background/fact-sheet.html 83. (back) Individual calorie needs vary with age,sex, activity level, and a number of other factors. World Health Organization (WHO), Energyand protein requirements , Technical report Series 724, report of a joint FAO/WHO/UNU expert consultation,Geneva, 1985, pp. 76-78. 84. (back) Graham-Brown, Sarah. "HumanitarianNeeds and International Assistance in Iraq after the Gulf War," from Iraq's EconomicPredicament , Kamil Mahdi, Editor. Exeter Arab and Islamic Studies Series, Ithaca Press,copyright©️Kamil Mahdi, 2002, p.283. 85. (back) For a discussion of the targetednutrition program in northern Iraq see the discussion below under "Nutritional Status Improves," orsee WFP, Office of the Iraq Program, Oil-for-Food, Background brief -- Nutrition; http://www.un.org/depts/oip/sector-nutrition.html 86. (back) Ibid., p. 283-4. 87. (back) The Iraqi government had refused toagree to an earlier offer by the U.N. Security Council to establish a similar OFFP (Resolution 706;Aug. 15, 1991). For more information on the U.N. Oil-For-Food Program and trade during the decade of the 1990ssee CRS Report RL30472 , Iraq: Oil-For-Food Program, International Sanctions, and Illicit Trade . 88. (back) U.N. Office of the Iraq Program,Oil-for-Food, Fact Sheet. 89. (back) Kamil Mahdi (2002b), p. 338. 90. (back) The official exchange rate has beenfixed at U.S. $1 = 0.311 ID since 1983. However, this official rate bears no relationship with thecurrency's true value. The black market rate has shown considerable variation over the past decade, often in relationto the U.N. sanctionsstatus and international petroleum prices. During 1996 the dinar rose from its lowest value of ID3,000 per U.S.dollar to ID1,000, reportedlyin anticipation of the adoption and implementation of the OFFP. [Ahmad (2002), p.174.] In March 2003, the blackmarket rate wasestimated to be U.S. $1 = 2,700 ID. [ The Economist , Economist Intelligence Unit, Country Report: Iraq,April 2003 Updater.] 91. (back) According to Gazdar and Hussain(2002; p.49), the food basket's market value was 19,048 ID in May 1996. The food basket's valuetemporarily hit a low of 5,866 ID in June 2002 as cited in U.N., Office of the Iraq Program, "The HumanitarianProgram in Iraq Pursuantto Security Council Resolution 986 (1995)," 12 November 2002, p. 13. 92. (back) WFP, Emergency Report No. 26, Iraqsection, paragraph (c), June 27, 2003. 93. (back) U.N. Office of the Iraq Program,Oil-for-Food, Humanitarian Imports, "Status of ESB account on 31 Dec.2002." http://www.un.org/depts/oip/background/basicfigures2.html . 94. (back) WFP, Office of the Iraq Program,Oil-for-Food, Background brief -- Nutrition. 95. (back) Preliminary, unpublished findings ofa 2002 U.N. survey of children under the age of five. WFP, Office of the Iraq Program, Oil-for-Food, Backgroundbrief -- Food Basket; http://www.un.org/depts/oip/food-facts.html . 96. (back) Ibid. 97. (back) WFP, Office of the Iraq Program,Oil-for-Food, Background brief -- Nutrition. 98. (back) Most of the information in this sectionrelevant to the agricultural sector of northern Iraq (unless otherwise indicated) is fromLeezenberg's chapter "Refugee Camp or Free Trade Zone? The Economy of Iraqi Kurdistan since 1991," from Iraq's EconomicPredicament , Kamil Mahdi, Editor. Exeter Arab and Islamic Studies Series, Ithaca Press,copyright©️Kamil Mahdi, 2002, pp. 289-319. 99. (back) UN Security Council, Resolutions: http://www.un.org/Docs/sc/unsc_resolutions.html 100. (back) U.S. Department of Defense(DOD), European Command, Operation Norther Watch, Chronology of Significant Events. http://www.defendamerica.mil/iraq/iraq_nofly.html 101. (back) Ahmad (2002), p. 187. 102. (back) Leezenberg (2002), p., 303. 103. (back) CRS Report RL30472 , p. 3. 104. (back) Ibid., p. 5. 105. (back) Leezenberg (2002), p. 314. 106. (back) Ibid., p. 311. 107. (back) World Bank, WDI 2003. 108. (back) Kamil Mahdi, "Iraq's AgrarianSystem: Issues of Policy and Performance," Chapter 9 from Iraq's Economic Predicament , KamilMahdi, Editor. Exeter Arab and Islamic Studies Series, Ithaca Press, copyright©️Kamil Mahdi, 2002, p. 337. 109. (back) During calendar 1997. Return to CONTENTS section of this Long Report.

Iraq's agricultural sector represents a small but vital component of Iraq's economy. Over the past several decades agriculture's role in the economy has been heavily influenced by Iraq'sinvolvement in military conflicts, particularly the 1980-88 Iran-Iraq War, the 1991 Gulf War, andthe 2003 Iraq War, and by varying degrees of government effort to promote and/or controlagricultural production. Rapid population growth coupled with limited arable land and a general stagnation in agricultural productivity has steadily increased dependence on imports to meet domestic food needssince the mid-1960s. Prior to the 1991 Gulf War, Iraq was a major trading partner with the U.S. Iraqbenefitted from substantial USDA agricultural export credit during the 1980s to purchase largequantities of U.S. agricultural commodities. By the mid-1980s Iraq was the major destination forU.S. rice exports. Iraq was also an important purchaser of U.S. wheat, corn, soymeal, and cotton. After the 1991 Gulf War, U.S. agricultural export credit to Iraq was ended and USDA was left with$2 billion in unpaid credit. U.S. agricultural trade with Iraq remained negligible through 2002. Present-day Iraqi agriculture and trade have been heavily shaped by the 1990 U.N. sanctions and the Iraqi government's response to them. From 1991 to 1996, prior to the startup of the U.N.'sOil-For-Food program (OFFP), Iraq's agricultural imports averaged $958 million or less than halfof the pre-war level. Under the OFFP, the value of Iraq's agricultural imports rebounded to average$1.5 billion (during the 1997-2002 period). In early 2003, just prior to the U.S. -- Iraq War, the country's agricultural sector remained beset by the legacy of past mis-management, unresolved disputes over land and water rights, and thelingering effects of a severe drought during 1999-2001. Clearly, Iraq will be dependent on importsfor fully meeting domestic food demand for several years to come. In the near term, food aidshipments are likely to play a major role in determining the share of Iraq's agricultural imports, andmay influence the evolution of future commercial imports. This report is an extension of CRS Report RS21516 , "Iraq's Agriculture: Background and Status." It provides a brief description of Iraq's agro-climatic setting and the history of agriculturalpolicy, production, and trade leading up to the period just prior to the 2003 Gulf War; it reviewsissues likely to affect the long-term outlook for Iraq's agricultural production and trade; and itprovides several tables of historical data relevant to understanding the evolution of Iraq's agriculturalproduction and trade. This report will be updated as events warrant. For detailed discussion on thestatus of humanitarian aid efforts, see CRS Report RL31833 , Iraq: Recent Developments inHumanitarian and Reconstruction Assistance . For discussion on the U.N. Oil-For-Food Programand trade during the decade of the 1990s see CRS Report RL30472 , Iraq: Oil-For-Food Program,International Sanctions, and Illicit Trade .

Since 1946, Congress has approved, on four occasions, legislation to regulate lobbyist contacts with Members of Congress. In each instance, the legislation was designed to require individuals and companies who lobby Members of Congress to register with the House of Representatives and the Senate and disclose receipts and expenditures related to lobbying. Initial registration and disclosure provisions, contained in the Legislative Reorganization Act of 1946, required lobbyists to register with Congress and disclose receipts and expenditures. In 1995, the Lobbying Disclosure Act repealed the 1946 act and created a system of detailed reporting and registration thresholds. In 1998, technical amendments to the 1995 law were passed. In 2007, the Honest Leadership and Open Government Act amended disclosure and reporting requirements to require quarterly, instead of semi-annual reporting. The Federal Regulation of Lobbying Act, for the first time, established requirements for individuals lobbying Congress to register with and report to the House of Representatives and the Senate. Included as part of the Legislative Reorganization Act of 1946, the Lobbying Act did not impose restrictions on lobbying activities. Instead, it merely required individuals who lobby Congress to register with the House and Senate and disclose certain activities. Perhaps most importantly, the Lobbying Act also imposed the requirement that all registration and disclosure statements be made under oath. Fines and possible jail time were established for incorrectly reporting lobbying contacts. The Lobbying Act established the first registration thresholds for individuals lobbying Members, committees, and congressional staff. Section 308 of the act required individuals to register if they contacted Congress about legislation. The section also detailed the information required from the lobbyists: Any person who shall engage himself for pay or for any consideration for the purpose of attempting to influence the passage or defeat of any legislation by the Congress of the United States shall, before doing anything in furtherance of such object, register with the Clerk of the House of Representative and the Secretary of the Senate and shall give to those offices in writing and under oath, his name and business address, the name and address of the person by whom he is employed, and in whose interest he appears or works, the duration of such employment, how much he is paid and is to receive, by whom he is paid or is to be paid, how much he is to be paid for expenses, and what expenses are to be included. Following registration with the House and Senate, the lobbyist was responsible for filing quarterly disclosure statements "detailing money received and expended, persons to whom funds were paid and the purposes of the funding, the names of any publications in which he has caused any articles or editorials to be published, and the proposed legislation he sought to influence. In addition, the registrant was bound to report the names and addresses of persons who made contributions to him of $500 or more." Since the Federal Regulation of Lobbying Act regulated conduct and activities bearing on First Amendment rights, the Supreme Court narrowly interpreted its reach and breadth, and applied the registration provisions only to those whose "principal purpose" was directly lobbying Members of Congress. This narrow interpretation excluded many persons and organizations who spent substantial time and funds on "lobbying," but for whom such lobbying was not necessarily the principal purpose of the organization, person, or entity. The Lobbying Disclosure Act (LDA) of 1995 repealed the Lobbying Act portion of the Legislative Reorganization Act of 1946. LDA also provided specific thresholds and clear definitions of lobbying activities, lobbying contacts, and who is a lobbyist, compared with the 1946 act. In reporting the LDA, the House Judiciary Committee summarized the need for new lobbying provisions: The Act is designed to strengthen public confidence in government by replacing the existing patchwork of lobbying disclosure laws with a single, uniform statute which covers the activities of all professional lobbyists. The Act streamlines disclosure requirements to ensure that meaningful information is provided and requires all professional lobbyists to register and file regular, semiannual reports identifying their clients, the issues on which they lobby, and the amount of their compensation. It also creates a more effective and equitable system for administering and enforcing the disclosure requirements. The LDA not only required that lobbyists attempting to influence Congress register with the Clerk of the House and the Secretary of the Senate, but that they file semi-annual reports on the nature of their lobbying contacts. See the Appendix for a list of definitions applicable to the LDA, as amended by the HLOGA. Pursuant to LDA Section 4, lobbyists must register with the Clerk of the House and Secretary of the Senate no more than 45 days after the lobbyist first makes a lobbying contact or is employed to make a lobbying contact if the "total income for matters related to lobbying activities on behalf of a particular client (in the case of a lobbying firm) does not exceed and is not expected to exceed $5,000" or the "total expenses in connection with lobbying activities (in the case of an organization whose employees engage in lobbying activities on its own behalf) do not exceed or are not expected to exceed $20,000." Section 4 further required that each registration contain the following six items: 1. the registrant's name, address, business telephone number, principal place of business, and a general description of his or her business or activities. 2. the registrant's client's name, address, principal place of business, and a general description of its business or activities. 3. the name, address, and principal place of business of any organization, other than the client, that contributes more than $10,000 toward the registrant's lobbying activities in a semi-annual reporting period, as described in 2 U.S.C. SS 1604(a), and has a major role in planning, supervising, or controlling lobbying activities 4. the name, address, principal place of business, amount of any contribution of foreign entities (if any) that hold at least 20% equitable ownership in the client, directly or indirectly plans, supervises, controls, directs, finances, or subsidizes the activities of the client, or is an affiliate of the client and has a direct interest in the outcome of lobbying activities and contributes more than $10,000 to the registrant's lobbying activity. 5. a statement on the general issue areas the registrant expects to engage in lobbying activities on behalf of the client and, if possible, specific issues that have already been addressed or are likely to be addressed. 6. the names of the registrant's employees who have acted or whom will act as a lobbyist on behalf of the client and if that person has been a covered executive or legislative branch official in the past two years (after December 19, 1995). A registered lobbyist who has multiple clients must file a separate registration form for each client. A registered lobbyist who makes multiple contacts for the same client only needs to register once. A lobbying organization that employs more than one lobbyist must submit a single registration form for each client listing all lobbyists working on behalf of that client. When a registered lobbyist is no longer employed by a client or lobbying organization or does not anticipate further lobbying contacts for a specific client, the lobbyist can file a registration termination form with the Clerk and the Secretary. Once a lobbyist or lobbying firm is registered with the Clerk and the Secretary, the LDA required the filing of semi-annual reports within 45 days of the end of a semi-annual reporting period, with a separate report filed for each client of a registered lobbyist. Pursuant to Section 5 of the LDA, the report was required to contain the following information: the registrant's name, the client's name, and any changes or updates to the information provided in the initial registration; for each general issue area which the registrant lobbied on behalf of the client (1) a list of specific issues, including bill numbers and specific references to executive branch actions (when practicable) which lobbyists employed by the registrant engaged in lobbying activities; (2) a list of the congressional and executive branch contacts; (3) a list of registrant employees who acted as lobbyists on behalf of the client; and (4) a description of interests by foreign entities, if any; a good faith estimate by lobbying firms of the total amount of income generated from the client from lobbying activities on behalf of the client; ; if a registrant engaged in lobbying activities on its own behalf, an estimate of the total expenses that the registrant and its employees incurred in connection with lobbying activities. Following the disclosure by registrants, the Clerk and the Secretary are required to provide guidance to lobbyists and the lobbying community on the implementation of reporting requirements. The Clerk and the Secretary are required to review, verify and ensure the accuracy, completeness, and timeliness of the registration and disclosure statements; make a list of registered lobbyists, lobbying firms, and clients publicly available; create a computerized filing system; make all filing available for public inspection; retain registration and disclosure statements for a period of at least six years; summarize information contained in registrations and reports on a semi-annual basis; notify lobbyists or lobbying firms in writing of non-compliance; and notify the United States Attorney for the District of Columbia of non-compliance by a lobbyist or a lobbying firm if the registrant has been notified in writing and has failed to provide an appropriate response within 60 days. The Honest Leadership and Open Government Act (HLOGA) of 2007 amended the LDA. HLOGA further refined thresholds and definitions of lobbying activities, changed the frequency of reporting for registered lobbyists and lobbying firms, added additional disclosures, created new semi-annual reports on contributions, and added disclosure requirements for coalitions and associations. The HLOGA did not specifically amend the LDA's registration requirements. The Clerk and the Secretary, however, were for the first time required to make registration and disclosure forms available, in a searchable and sortable format, on the Internet, for public inspection. The HLOGA amendments to the LDA made several changes to disclosure requirements. Under the LDA, lobbyists and lobbying firms were required to submit forms disclosing activities on a semi-annual basis (as discussed above under " Disclosure " of the Lobbying Disclosure Act). The HLOGA amendments created quarterly, instead of semi-annual, reporting periods and shortened the deadline for submission from 45 days to 20 days after the filing period ends. The amended text reads as follows: No later than 20 days after the end of the quarterly period beginning on the first day of January, April, July, and October of each year in which a registrant is registered under section 4 [2 USCS SS 1603], or on the first business day after such 20 th day if the 20 th day is not a business day, each registrant shall file a report with the Secretary of the Senate and the Clerk of the House of Representatives on its lobbying activities during such quarterly period. A separate report shall be filed for each client of the registrant. The threshold for filing quarterly reports was also lowered, requiring lobbyists and lobbying firms to file reports of work when total income from lobbying exceeded $2,500 (formerly $5,000) and where total expenses used in connection with lobbying exceeded $10,000 (formerly $20,000) for any given quarterly reporting period. In addition to the amendments concerning quarterly reports of lobbying activity, Congress amended the LDA to create a new semi-annual reporting requirement for campaign and presidential library contributions by lobbyists and lobbying firms. These reports are due within 30 days of the end of a semi-annual reporting period. These semi-annual contribution reports are to contain the following information: the name of the person (including employer) or organization; the names of all political committees established or controlled by the person or organization; the name of each federal candidate or officeholder, leadership PAC, or political party committee, to whom aggregate contributions equal to or exceeding $200 were made by the person or organization, or a political committee established or controlled by the person or organization, and the date and amount of each such contribution made; the date, recipient, and amount of funds contributed or disbursed during the semiannual period by the person or organization or a political committee established or controlled by the person or organization; the name of each Presidential library foundation, and each Presidential inaugural committee, to whom contributions equal to or exceeding $200 were made by the person or organization, or a political committee established or controlled by the person or organization, within the semiannual period, and the date and amount of each such contribution within the semiannual period; a certification by the person or organization filing the report that the person or organization has read and is familiar with those provisions of the Standing Rules of the Senate and the Rules of the House of Representatives relating to the provision of gifts and travel; and has not provided, requested, or directed a gift, including travel, to a Member of Congress or an officer or employee of either House of Congress with knowledge that receipt of the gift would violate rule XXXV of the Standing Rules of the Senate or rule XXV of the Rules of the House of Representatives. The Clerk of the House and the Secretary of the Senate have collected registration and disclosure data since the passage of the LDA in 1995. Using these data, it is possible to analyze registration and disclosure trends under the LDA and changes made by the HLOGA amendments. The following sections examine registration and disclosure data filed under the LDA between 2001 and 2007, and between 2008 and 2010 following the passage of the HLOGA amendments. All data are presented from the Clerk's lobbying disclosure website. The LDA requires the Clerk and the Secretary to use a single, computer based system for lobbyists and lobbying firms to file registration and disclosure forms. The Clerk and the Secretary, however, use different search engines and display the data differently. Data from the Clerk are utilized because they provide distinctions between paper and electronically filed reports. The distinction between report submission methods shows compliance with the LDA requirements for electronic submissions and the rate of online filing prior to the passage of the HLOGA amendments. Tracking these numbers is important because it enables a comparison of lobbying registration and disclosure before and after the HLOGA amendments. Analyzing the registration, termination, and disclosure data before and after the HLOGA amendments allows a systematic examination of the amendments impact on the lobbying community. If the goal of the HLOGA was to more closely regulate lobbyists by requiring additional disclosure, the data constitute an opportunity to examine the law's impact. Since 2001, almost 50,000 individuals and firms have registered, as lobbyists under the LDA. During that time, the number of individuals and firms that registered has varied annually. While no specific pattern has developed, it appears that with the exception of 2001, more new registrations registered in the first session of a Congress (e.g., 2003, 2005, 2007, and 2009) than in the second session (e.g., 2004, 2006, 2008, and 2010). In addition to registering with the Clerk and the Secretary, lobbyists and lobbying firms are also required to amend registration forms when changes are made to their status, clients, contact information, or other identifying information. Figure 1 shows the total number of new registrants per year and number of registration amendments filed per year before and after the enactment of the HLOGA amendments. Immediately prior to the HLOGA amendments, the number of registrants amending their forms declined from a peak of 1,279 in 2002 to a low of 599 in 2007. Under the HLOGA, the number of registration amendment forms increased to 981 in 2008. The number of registration amendments decreased slightly (884) in 2009 and returned to 2007 levels in 2010 (587). The reason for the variation in registration amendments does not appear to follow a particular pattern. Instead, it appears that the filing of registration amendments might be governed by lobbyists' need to make changes based on hiring and firing of staff and recruitment of new clients. The HLOGA amendments to LDA, for the first time, required electronic filing to the Clerk and the Secretary. The Clerk and the Secretary, however, have allowed lobbyists and lobbying firms to file registration forms electronically since 2002, when 0.38% of all registrations were filed electronically. Since 2009, 100% of all registrations were filed electronically. Figure 2 shows the number of registrations filed electronically, on paper, and in total since 2001. Electronic submission of registration forms began to increase in 2005, when 10.7% of new registrants filed electronically. While filing electronically was not required prior to the HLGOA amendments, the number of registrations filed electronically increased significantly in 2006 and 2007. In 2006, the number of electronic registrations eclipsed paper registrations for the first time (82.2% of all registrations were filed electronically). By 2007, the number of registrations had again increased with 94.7% of lobbyists and lobbying firms filing electronically. Following the enactment of HLOGA, 99.9% of registrations were filed electronically in 2008, and 100% were filed electronically in 2009 and 2010. A lobbyist or lobbying firm that has gone out of business or is no longer representing a client is required to file a registration termination report with the Clerk and the Secretary. Under LDA, termination reports were filed on a semi-annual basis. Figure 3 shows the number of registration termination reports filed during the mid-year reporting period (June 30), during the year-end reporting period (December 31), and the total number of terminations for the year (from 2001 to 2010). Since 2001, the number of terminations has increased every year except for 2007 and 2010 when there was a slight decline in total terminations from the previous year. Overall, between 2001 and 2007 there appeared to be only a slight increase in terminations at year's end, compared with the mid-year reporting period. The difference may have existed because lobbyists and lobbying firms adjust clients and staff more at the end of congressional sessions. The difference could also be tied to the number of registrations. As more lobbyists and lobbying firms register with the Clerk and the Secretary, more termination forms may be submitted. Pursuant to the HLGOA amendments, termination reports were changed from semi-annual reports to quarterly reports. Figure 4 shows the quarterly termination reports filed between 2008 and 2010. The trend toward a greater number of year-end terminations evident under the LDA continues under the HLOGA amendments. The number of terminations in the fourth quarter (an average of 1,651) is higher than for any of the previous three quarters. The first quarter (an average of 1,491) has the second-highest number of terminations. The number of registration terminations filed with the Clerk and the Secretary in the second quarter (an average of 1,200) and the third quarter (an average of 1,134) of between 2008 and 2010 were relatively consistent. The difference in terminations in the fourth quarter of 2008 and the first quarter of 2009 may exist because, as previously stated, lobbyists and lobbying firms change clients and staff more frequently at the beginning and end of a Congress rather than during the sessions. Alternately, the increase in registration terminations could reflect the change in administration from a Republican to a Democratic White House. Since the LDA covers both legislative and executive branch officials, lobbyists and lobbying firms could adjust staffing levels to reflect changes in administration priorities and policy. Under the LDA, lobbyists and lobbying firms were required to file semi-annual reports disclosing certain information about clients, issues lobbied, government officials lobbied, an estimate of income generated from each client, and an estimate of total expenses incurred in connection with lobbying activities. Since 2001, the number of disclosure reports filed has increased from a low of 12,853 disclosures in 2001 to a high of 19,178 in 2007. Although this could indicate an overall increase in lobbying activity, without additional data for the period under the HLOGA amendments, a definitive conclusion cannot be made. In most years, the number of year-end reports was slightly greater than the number of mid-year reports. This may reflect an increase in lobbying activity towards the end of a congressional session when additional efforts might be needed to ensure the passage of important legislation. Figure 5 shows the number of mid-year and year-end reports filed by lobbyists and lobbying firms between 2001 and 2007. Pursuant to the HLOGA amendments, disclosure reports were changed beginning in 2008 from semi-annual reports to quarterly reports. For this reason, Figure 5 does not contain a similar accounting of disclosure reports for 2008 and 2009. To reflect the reporting change, Figure 6 shows the volume of quarterly disclosure reports filed between 2008 and 2010. In 2008, the number of disclosure reports filed from one quarter to the next decreased from 18,615 during the first quarter to 16,372 in the fourth quarter. In 2009, the number of disclosure reports filed each quarter was slightly less than for 2008 for the first and second quarter and higher for the third and fourth quarters. Contrasted with an average of 18,270 mid-year and 17,937 year-end disclosure statements filed between 2005 and 2007 under the LDA, the decline in filings in the fourth quarters of 2008 and 2010 appears to be incongruous with the previous data. Data for 2008 and 2010 represent the end of a Congress. It is possible that the number of disclosures filed in the fourth quarter of 2008 and 2010 was a result of decreased lobbying activity. As a Congress completes its legislative agenda, the need to lobby Members declines. The impact of the HLOGA on the registration, termination, and disclosure of lobbyists and lobbying firms is mixed. In the three years since the HLOGA amendments were implemented, it appears the registration trends that existed between 2001 and 2007 continue under the HLOGA amendments. For termination, overall trends also continue, with an increase in terminations in the fourth quarter of 2008 and the first quarter of 2009. Since the first quarter of 2009, the number of terminations has stabilized and roughly mirrors the 2008 numbers. Overall, while terminations in 2008 and 2009 are greater than anytime between 2001 and 2007, the pattern of increased terminations in congressional election years, followed by a slight decline the following year, continues. The most significant change in reporting occurred for the filing of disclosure statements. Instead of filing two reports per year on lobbying activity, lobbyists, and lobbying firms are required to report four times per year. Collecting the data in quarters instead of semi-annual periods appears to have uncovered a reporting trend that was otherwise obscured under the semi-annual system. For 2008 and 2010, the data shows an overall decline in disclosure reports for the fourth quarter. The data suggest that lobbyists and lobbying firms make more contacts and engage in a greater percentage of their lobbying activity in the first three quarters of the year than at the end of a congressional session. The year-end report data from 2001 to 2007, which included both third and fourth quarter activity, may have been motivated by third quarter activity that was previously included in year end reports. It is possible, however, that the 2008 and 2010 upticks in reporting reflect the transition to a new presidential administration coupled with the beginning of a new Congress. For 2009, the volume of disclosure reports does not easily fit with the volume of reports for 2008 and 2009. Fourth quarter lobbying activity, as shown by the number of disclosure reports continues at a high level. This may reflect the continuation of Congress's legislative agenda from the first to the second session. In the 111 th Congress, many issues that were initiated during the first session continued through an after-Thanksgiving session and into the second session. Lobbying for those provisions continued throughout that period. Pursuant to the Lobbying Disclosure Act, as amended by the Honest Leadership and Open Government Act of 2007 (Chapter 26, Title 2, United States Code ), the following definitions are applicable to the registration and disclosure process.

On September 14, 2007, President George W. Bush signed S. 1, the Honest Leadership and Open Government Act of 2007 (P.L. 110-81), into law. The Honest Leadership and Open Government Act (HLOGA) amended the Lobbying Disclosure Act (LDA) of 1995 (P.L. 104-65, as amended) to provide, among other changes to federal law and House and Senate rules, additional and more frequent disclosure of lobbying contacts and activities. This report focuses on changes made to lobbying registration, termination, and disclosure requirements and provides analysis of the volume of registration, termination, and disclosure reports filed with the Clerk of the House of Representatives and the Secretary of the Senate before and after the HLOGA's passage. This report does not analyze the content of these reports. Under the LDA, as amended by the HLOGA, the Clerk and the Secretary manage the collection of registration, termination, and disclosure reports made by lobbyists and lobbying firms. Prior to the HLOGA, lobbyists and lobbying firms were required to submit semi-annual reports to the Clerk and the Secretary. The HLOGA amendments to the LDA modified reporting requirements to require quarterly filing of disclosure and termination reports. These forms are available for public inspection from the Clerk's and Secretary's websites. The filing of registration, termination, and disclosure reports under the HLOGA amendments has continued at approximately the same pace as under the LDA. Examining data for filings between 2001 and 2007 under the LDA, and for 2008 through 2010 under the HLOGA amendments, reveals that the number of new registrations has remained mostly consistent under the HLOGA amendments. The termination reports filed by lobbyists and lobbying firms no longer representing a client have also remained constant following the implementation of the HLOGA amendments. Only disclosure reports, now filed quarterly, show a change between 2007 and 2010. Under the HLOGA amendments, the number of disclosure reports filed in the fourth quarter between 2008 and 2010 has decreased from filings between 2001 and 2007. For further analysis on the Honest Leadership and Open Government Act and its other provisions, including amendments to House and Senate gift rules, travel restrictions, and campaign contributions, see CRS Report RL34166, Lobbying Law and Ethics Rules Changes in the 110th Congress, by [author name scrubbed]; CRS Report RL31126, Lobbying Congress: An Overview of Legal Provisions and Congressional Ethics Rules, by [author name scrubbed]; CRS Report RS22566, Acceptance of Gifts by Members and Employees of the House of Representatives Under New Ethics Rules of the 110th Congress, by [author name scrubbed]; CRS Report RL34377, Honest Leadership and Open Government Act of 2007: The Role of the Clerk of the House and the Secretary of the Senate, by [author name scrubbed]; and CRS Report R40091, Campaign Finance: Potential Legislative and Policy Issues for the 111th Congress, by [author name scrubbed].

The prevention and control of domestic crime has traditionally been a responsibility of state and local governments, with the federal government playing more of a supportive role. As crime rates continued to increase throughout the 1960s, 1970s, and 1980s, the federal government increased its involvement in domestic crime control efforts. It did so primarily through a series of grant programs to encourage and assist states and communities in their efforts to control crime, as well as through the expansion in the number of offenses that could be prosecuted in the federal criminal justice system. Over a 10-year period (1984-1994), Congress enacted five major anti-crime bills and increased appropriations for federal assistance to state and local law enforcement agencies. As a result, the Federal Bureau of Investigation (FBI) had seen an expansion of its role in fighting domestic crime as Congress began to add more crimes to the federal criminal code that were previously under the sole jurisdiction of state and local governments. Within the past several years, however, some federal assistance to state and local law enforcement has declined, and the FBI has refocused its resources on countering terrorism as federal law enforcement efforts since September 11, 2001 (9/11), have focused primarily on protecting the nation against terrorist attacks. A major policy question facing Congress is, What should be the role of the federal government in crime control? More specifically, what should its role be in controlling violent crime, combating fraud, setting drug control policy, and overseeing Department of Justice (DOJ) grant programs? As mentioned, the prevention and control of domestic crime has conventionally been under the purview of state and local governments. However, as the violent crime rate increased in the 1960s, 1970s, and 1980s, and some questioned the ability of state and local law enforcement to combat the growing problem with limited resources at their disposal, the federal government began to take a more direct role in crime control. The following section discusses the trends in the nation's violent and property crime rates over the past two decades. The FBI's Uniform Crime Report (UCR) program compiles data from monthly reports transmitted directly to the FBI from approximately 17,000 local police departments or state agencies. Of interest to lawmakers are the two indices of crimes that are the basis of the UCR. The FBI collects data on the number of offenses known to police, the number and characteristics of persons arrested, and the number of "clearances" for eight different offenses, collectively referred to as Part I offenses. Part I offenses include murder and nonnegligent manslaughter, forcible rape, robbery, aggravated assault, burglary, larceny-theft, motor vehicle theft, and arson. Within the Part I offenses, crimes are categorized as either violent or property crimes. Violent crimes include murder and nonnegligent manslaughter, forcible rape, robbery, and aggravated assault. Property crimes include burglary, larceny-theft, motor vehicle theft, and arson. The FBI also collects data on the number of arrests made for 21 other offenses, known as Part II offenses. The UCR collects crime data from the various state and local law enforcement agencies and presents it in a variety of formats in the UCR. The data on which the crime rates are derived are offenses reported to the police (as opposed to arrests made by police or cases cleared by the police). Based on analysis of the UCR data, the national violent crime rate began to increase sharply in the 1960s. The increase continued throughout the 1970s and into the early 1990s, peaking in 1991. By the mid-1990s, however, the violent crime rate began to decline, as illustrated in Figure 1 . The violent crime rate continued to decline into the new millennium, and despite slight increases in 2005 and 2006, it declined once again in 2007. This decline continued through 2009, with the violent crime rate at its lowest level since the mid-1970s. Similar to the general decline in the national violent crime rate since the mid-1990s, the national property crime rate has trended downward as well, as illustrated in Figure 2 . The property crime rate began to steadily decline in the early 1990s, increased slightly in 2001, and then continued to decline through 2009. Despite the declining crime rates, Congress has continued to debate measures that may further decrease both violent and non-violent crime as well as provide assistance to state and local criminal justice systems. Following is a discussion of selected crime-related issues that were of concern for the 111 th Congress. The national violent crime rate has generally decreased since the mid-1990s. However, interest in combating violent crimes across the United States has remained. Although policy makers have been concerned with all forms of violent crimes, the selected issue areas discussed below were of interest to the 111 th Congress. One of the primary questions spanning these issues was, What should be the federal government's role in combating various crimes? Another general issue was whether Congress has provided the best regulatory, investigative, and prosecutorial tools to counter violent crime around the country. Current law defines hate crimes to include any crime against either person or property, in which the offender intentionally selects the victim because of the victim's actual or perceived race, color, religion, national origin, ethnicity, gender, gender identity, disability, or sexual orientation. Although hate crimes may fall under the categories of both violent and property crimes, policy makers tend to focus more attention on those hate crimes that may be classified as violent crimes. Current federal hate crime law also prohibits the use of force, or threat of force, to injure, intimidate, or interfere with any persons for reasons related to their race, color, religion, or national origin, while they are engaged in certain federally protected "civil rights" activities. In 2009, there were 6,604 reported incidents of hate crimes. For statistical purposes, a crime is labeled a hate crime if there is sufficient evidence to lead a reasonable person to conclude that the offender's actions were motivated, in whole or in part, by his or her bias. One issue the 111 th Congress faced was whether federal jurisdiction over hate crimes should be broadened by adding federal penalties for hate crimes that currently fall under the jurisdiction of state, tribal, local, and municipal authorities. Although some argue that greater federal involvement would ensure that hate crimes are systematically addressed, others contend that additional federal penalties for hate crimes would be redundant and largely symbolic, as penalties for those crimes already exist under state law. Another issue was whether the definition of hate crimes should be broadened to include crimes motivated by additional biases, such as a bias toward gender identity. The Matthew Shepard and James Byrd, Jr. Hate Crimes Prevention Act, Division E of P.L. 111-84 , among other things, includes gender identity in the list of bias-motivated hate crimes. In addition to questioning whether federal hate crime jurisdiction should be broadened, another issue that Congress considered was whether there should be greater federal assistance to state and local law enforcement in not only investigating and prosecuting hate crimes, but in categorizing and reporting them as well. Finally, Congress also considered whether to include crimes against the homeless population in the crime data collected by the Federal Bureau of Investigation. Similarly to hate crimes, gang crimes may be classified as both violent crimes and property crimes. In discussing gang crimes, however, policy makers have tended to focus attention on strategies to curb violent gang crimes rather than gang-related property crimes. According to a survey of law enforcement agencies on the characteristics of youth gangs conducted by the National Youth Gang Center (NYGC), gang activity is pervasive in both urban and rural America. According to the NYGC, an estimated 774,000 gang members and 27,900 gangs were active across the United States in 2008. Of the cities, suburban areas, towns, and rural counties surveyed, about 32.4% experienced gang problems in 2008. Policy makers have long considered solutions to youth gang violence that include a combination of prevention, intervention, and suppression efforts. However, as gang violence increases, some are calling for different approaches to the issue. For example, policy makers in the 111 th Congress considered whether to create new or expand on existing grant programs to provide funding for research on gang prevention. They also considered grant programs that could provide funding for gang-specific investigations and prosecutions. Also, the 111 th Congress debated whether or not it would be necessary or beneficial to include gang-specific provisions in the Racketeer Influenced and Corrupt Organization (RICO) Act in order to aid in prosecuting gang members for specified gang crimes. Congress did not choose to expand federal authority to prosecute juveniles, including gang members, as adults. Another issue that the 111 th Congress considered was whether to amend the federal criminal code to update the definition of a gang as well as criminalize specified gang crimes. The Government Accountability Office (GAO), for instance, reports that a uniform definition of "gangs" across federal investigative agencies may enhance coordination of gang-related data collection across agencies. Statistics on crime and mortality are often used in the gun control debate. For instance, in 2009, 67% of homicides with a known cause were firearm-related. Congress has continued to debate the efficacy and constitutionality of federal regulation of firearms and ammunition, with advocates arguing both for and against greater gun control. Proposals to legislatively restrict the public availability of firearms have raised various crime-related questions, including whether increased regulation of firearm commerce or ownership might significantly affect the rates of violent crimes such as homicide, assault, and robbery. There were several firearm-related issues that the 111 th Congress considered. One was the federal government's role in legislating on individuals' rights to carry concealed weapons. A second issue was whether background check records for approved firearm transactions should be retained to enhance terrorist screening. Another issue revolved around whether there should be further regulations on certain firearms previously defined in statute as "assault weapons" or on certain long-range .50 caliber rifles. Yet another issue Congress considered was whether to require background checks for private firearm transfers at gun shows. Policy makers have been concerned with the prevalence and types of fraud committed across the country. In response, the 111 th Congress passed the Fraud Enforcement and Recovery Act of 2009 (FERA), in part to address mortgage, securities, commodities, and financial fraud, among other things. The broad policy issue cross-cutting various types of fraud and theft was whether the federal response has or can effectively keep pace with the evolving nature of these crimes. As the nature of these crimes changes, how can policy makers provide the necessary resources and update the criminal statutes to allow for effective investigation and prosecution of these crimes? Identity theft is the fastest growing type of fraud in the United States, and the Federal Trade Commission (FTC) estimates that identity theft costs consumers about $50 billion annually. In 2009, about 11.1 million Americans were reportedly victims of identity theft--an increase of about 12% over the approximately 9.9 million who were victimized in 2008. In addition, identity theft is often interconnected with various other criminal activities, ranging from credit card and bank fraud to immigration and employment fraud. Consequently, the 111 th Congress debated the federal government's role is in preventing identity theft and its related crimes, relieving the effects of identity theft on its victims, and providing the criminal justice system with effective tools to investigate and prosecute identity thieves. In preventing personal information from falling into the hands of identity thieves, one issue that the 111 th Congress confronted was whether it is the federal government's role to regulate the availability of personally identifiable information (social security numbers, in particular) in the public, as well as in the private, sector. One policy option considered was to provide specific agencies with the rulemaking authority to set standards for the sale of personally identifiable information in the private sector. Policy makers also considered prohibiting the use of personally identifiable information on government documents, such as Medicare identification cards, and Congress passed the Social Security Number Protection Act of 2010 ( P.L. 111-318 ) that prohibits the display of social security numbers on government-issued payment checks. Another issue at hand was that in the instance of a data breach, should there be more strict requirements regarding the reporting of the data breach? For instance, policy makers considered whether to require the reporting of data breaches to law enforcement or to individuals whose personal information may have been compromised. Another issue that the 111 th Congress considered in attempt to punish or deter identity thieves was whether the list of predicate offenses for aggravated identity theft should be expanded to include additional crimes commonly facilitated by identity theft. It has been estimated that organized retail crime (ORC) may cost the retail industry over $30 billion dollars each year. In addition to the lost income to retailers, ORC can pose both economic and health risks to society; states suffer lost tax revenue, and individuals may face health risks from consuming stolen items such as baby formula or over-the-counter medication that have not been stored properly by ORC thieves. Stolen goods are resold in both national and international, physical and Internet-based marketplaces. Although there is little debate that ORC is a federal issue--thieves cross state lines to commit crimes and store goods, and they resell the illegally obtained items without regard for district lines--the debate arises over the federal government's role in combating it. In particular, the 111 th Congress questioned whether there are currently effective investigative and prosecutorial tools in place to combat ORC or whether the criminal code should be amended to include specific provisions criminalizing it. Another question debated was whether the federal government should play a role in regulating online marketplaces to ensure that law enforcement is able to obtain information to investigate potentially fraudulent sellers. The National Drug Intelligence Center (NDIC) has indicated that illicit drugs--particularly their trafficking and abuse--remain a significant threat to American society. Drugs are involved in other violent and non-violent crimes; as of 2009, about 53% of the total federal prison population had been convicted and sentenced for drug-related offenses. Policy makers have been concerned with combating drug crimes and sentencing offenders. Questions remain, however, whether current drug policies are effective in reducing domestic production, trafficking, and use of illicit drugs. Drug trafficking organizations (DTOs) pose economic and social threats to the United States, and according to the NDIC, Mexican DTOs are now the largest drug trafficking threat. The NDIC estimates that Mexican DTOs maintain drug distribution networks, or supply drugs to distributors, in at least 230 U.S. cities. Some areas of the country have experienced higher incidences of drug trafficking than others, and currently 14% of U.S. counties are designated as High Intensity Drug Trafficking Areas (HIDTAs). The HIDTA Program provides additional federal resources to areas plagued by drug trafficking and promotes multilateral coordination among drug control organizations. Policy makers in the 111 th Congress questioned whether to designate (via legislation) more counties as part of HIDTAs. Other policy options debated for including additional areas with an increased prevalence of drug trafficking into the HIDTA program included adjusting the criterion for inclusion into the HIDTA program or adjusting the unit of inclusion into the program. Policy makers remained concerned that escalating drug-related violence in Mexico along the U.S.-Mexico border may spill over in to the U.S. For example, there have been anecdotal reports of increased drug-related violence, such as kidnappings related to drug smuggling (also related to other crimes such as human smuggling). Issues facing the 111 th Congress included whether to authorize additional funding for increased law enforcement initiatives along the Southwest border as well as whether to direct the formulation of border task forces specifically to address drug-related violence. In addition, Congress considered whether to increase penalties for the manufacture, possession, distribution, or trafficking of illegal substances. Judges have discretion in sentencing defendants unless the offense carries a mandatory sentence, as specified in the law. While some view this as an opportunity for federal judges to take into consideration the circumstances unique to each individual offender, thus handing down a sentence that better fits the offender, others fear that such discretion may result in unwarranted disparity and inconsistencies in sentencing across judicial districts such as those that led to the original enactment of federal sentencing guidelines in 1984. With respect to sentencing, several issues confronted the 111 th Congress. As discussed below, one issue was whether Congress should eliminate or reduce the disparity in federal sentences for crack and powder cocaine violations. Another issue was whether the federal prison system should allow for early release for certain prisoners under certain circumstances. Mandatory minimum sentencing laws require offenders to be imprisoned for a specified period of time for committing certain types of crimes. The intent of mandatory minimum sentencing is to punish the most serious offenders by incarcerating them for long periods. Proponents contend that mandatory minimums decrease crime, serve as deterrents, and ensure certainty in the criminal justice system. Critics, however, argue that the laws are disproportionately applied to non-violent, minority offenders. One overarching issue facing Congress was whether the mandatory sentences imposed on offenders are the most appropriate sentences. While the debate over mandatory minimum sentences tends to focus on non-violent, drug offenses, it is especially apparent with the crack-versus-powder cocaine sentencing disparities. Congress, through the Violent Crime Control and Law Enforcement Act of 1994, directed the U.S. Sentencing Commission (the Commission) to study the difference in penalties for powder and crack cocaine offenses. In 1995, 1997, 2002 and 2007, the Commission reported to Congress on the disparity in penalties for crack and powder cocaine offenses. In the first report, the Commission called for Congress to equalize the quantities between crack and powder cocaine that trigger a mandatory minimum penalty. However, in their 1997, 2002, and 2007 reports, the Commission recommended that the five-year and 10-year "trigger" quantities for crack cocaine be raised, but not to the level of powder cocaine. While the penalties remained in place at the federal level, some states have begun to take measures to ameliorate the discrepancies in state law. In November 2007, the Commission enacted a retroactive amendment lowering the recommended penalties for crack cocaine offenses, but it does not impact the mandatory minimum penalties that are in current law. The 111 th Congress passed the Fair Sentencing Act of 2010 ( P.L. 111-220 ), reducing the statutory 100:1 ratio in crack/powder cocaine quantities that trigger the mandatory minimum penalties under 21 U.S.C. SS 841(b)(1) to a ratio of 18:1. It also removes the mandatory minimum five-year sentence for simple possession of crack cocaine. As Congress addresses issues related to the incarceration of non-violent drug offenders and increased overcrowding in federal prisons, one option that has been receiving considerable attention is early release. In 1984, parole was eliminated in the federal criminal justice system, pursuant to the Sentencing Reform Act of 1984. As a result, the majority of federal inmates are serving their sentences in full. One question raised in the 111 th Congress was whether there should be some form of early release for federal prisoners. Another consideration for the 111 th Congress involved the mechanism by which early release should be determined; possible options included expanded good time credit or credit from employment or service while in prison. A second issue that confronted the 111 th Congress surrounded juvenile prisoners sentenced to life in prison without the possibility of parole. Some have argued that juveniles committing adult crimes should receive the same sentences as adults committing the same crimes. Others, however, have argued that juveniles should not be sentenced to life in prison without the possibility of parole for a variety of reasons, including the cognitive differences between adults and juveniles. Because it ordinarily defers to state juvenile authorities, the federal government has a limited role in administering juvenile justice. However, the federal government has used grant programs, such as those authorized by the Juvenile Justice and Delinquency Prevention Act, in order to influence the states' juvenile justice systems. In this light, policy makers have deliberated whether to incentivize a system that includes the possibility of early release. One policy option that the 111 th Congress considered was whether to utilize grant monies as incentives for states to establish a review board that could evaluate cases of juveniles sentenced to life in prison and make decisions regarding early release. Department of Justice (DOJ) grant programs and appropriations is a perennial issue of oversight and legislation for Congress. While some programs provide assistance to state and local law enforcement, others provide assistance to other aspects of justice administration around the country. Many of these grant programs have experienced decreases in funding. One overarching issue that the 111 th Congress considered was the adequacy of funding provided for justice assistance programs. Yet another aspect of these grant programs that Congress considered was their scope, including whether the number of grant programs should be changed or their purpose areas altered. The COPS program was created by Title I of the Violent Crime Control and Law Enforcement Act of 1994. It aims to increase community policing in part by awarding grants to state, local, and tribal law enforcement agencies for hiring and training new officers as well as for several non-hiring purposes, including developing crime-prevention technology and strategy. The 109 th Congress passed legislation that reauthorized the COPS program through FY2009. In addition to reauthorizing the program, this legislation also consolidated the COPS program into a single grant program. Prior to this, the COPS program consisted of several different subgrant programs. Several COPS-related issues were before the 111 th Congress. One was whether to reauthorize the COPS program, as the most recent authorization expired at the end of FY2009. Another issue was whether to increase funding levels for the program. The 111 th Congress provided supplemental funding for COPS in addition to its annual appropriation; Congress included a $1 billion appropriation for COPS hiring grants in the American Recovery and Reinvestment Act of 2009 (ARRA, P.L. 111-5 ). A third issue was whether the COPS program should be restructured or maintained. Several bills were introduced in the 111 th Congress that would have modified the COPS program, reauthorized appropriations for the program, or both. Three of these bills-- H.R. 1139 , S. 167 , and H.R. 1568 --would have reauthorized appropriations for the COPS program. In addition, H.R. 1139 and S. 167 would have, among other things, changed COPS from a single-grant to a multi-grant program and made the COPS Office an exclusive component of the Department of Justice (DOJ). H.R. 3154 and S. 1424 would have required the Attorney General to award grants to units of local government with high violent crime rates so they could increase the size of their police forces. H.R. 1139 was the only one of the five bills discussed above to receive any legislative action; the bill was passed by the House, but no action was taken by the Senate. In addition to the $1 billion COPS received under the ARRA, Congress appropriated $550.0 million for COPS for FY2009 under the Omnibus Appropriations Act, 2009 ( P.L. 111-8 ) and $791.6 million for FY2010 under the Consolidated Appropriations Act, 2010 ( P.L. 111-117 ). As more focus is being placed on young offenders, some have questioned the way in which the United States treats this population in the nation's criminal justice systems. Over the past 30 years, the juvenile justice system has generally shifted from a focus on rehabilitation to a greater focus on holding juveniles accountable for their actions. In a larger sense, this is the underlying tension that drives the national debate surrounding the juvenile justice system: rehabilitation versus retribution. This debate has been in focus again because authorization for the various Juvenile Justice Delinquency and Prevention Act (JJDPA) provisions expired in FY2007 and FY2008. The last time the JJDPA was reauthorized in 2002, Congress restructured many of the grant programs aimed at preventing juvenile delinquency; a large number of smaller grant programs were repealed, and most of their purpose areas were consolidated into one large block grant requiring accountability and graduated sanctions. Many of the programs that were repealed, however, continue to receive annual appropriations even as the overall juvenile justice appropriation has decreased by about 25% since FY2002. A core issue in the larger juvenile justice debate is whether rehabilitation should be the driving theme in the handling and processing of young offenders through the criminal justice system, or whether a more punitive approach that emphasizes young offenders' responsibility for the crimes they commit should be the focus. In addition, when considering the possible reauthorization of the JJDPA, the 111 th Congress also debated the adequacy of existing grant programs and whether new grant programs should be enacted. While the crime rates have generally tended to decrease in recent years, certain jurisdictions have seen an uptick in their crime rates, especially the violent crime rate. In an effort to address the issue, in part, some have called for the establishment of a grant program that would provide funding to states and localities to establish or maintain programs that provide protection or assistance to witnesses involved in homicide, serious violent felony, or serious drug cases. H.R. 1741 , the Witness Security and Protection Grant Program Act of 2010, would have, among other things, created a grant program to provide funding to state, tribal, and local governments to establish or maintain witness protection programs for witnesses in cases involving homicide, a serious felony or drug offense, or gangs or organized crime. The bill was passed by the House and referred to the Senate by the Judiciary Committee. The full Senate did not consider the bill. Partly in response to the United States having the highest reported incarceration rate in the world, legislation was introduced in the 111 th Congress that would have established a commission to undertake a comprehensive review of the U.S. criminal justice system. The National Criminal Justice Commission Act of 2010 ( H.R. 5143 , S. 714 )--passed by the House--would have, among other things, established a 14-member commission to evaluate costs, practices, and policies of federal and state criminal justice systems around the country. Upon completion of the review, the commission would have been charged with providing recommendations to Congress regarding potential policy changes to reduce incarceration rates, decrease prison violence, improve prison administration, utilize proven strategies to reduce criminal behavior, bolster reintegration of ex-offenders, reevaluate criminalization of and treatment for selected drug-related crimes, improve treatment for mental illness, and enhance law enforcement response to criminal organizations.

States and localities have traditionally been responsible for preventing and controlling domestic crime. As crime rates continued to increase throughout the 1960s, 1970s, and 1980s, the federal government increased its involvement in crime control efforts. Over a period of 10 years (1984-1994), Congress passed five major anti-crime bills and increased appropriations for federal assistance to state and local law enforcement agencies. Since the 9/11 terrorist attacks, federal law enforcement efforts have been focused on countering terrorism and maintaining homeland security. Amid these efforts, however, Congress has continued to address many traditional crime-related issues. After peaking in the early 1990s, violent and property crime rates have generally tended to decrease. Despite this decline, policy makers have remained concerned with combating the various types of crime that still exist around the country. This report aggregates various issues surrounding federal crime control into five broad themes: violent crime control, combating fraud and theft, drug control, sentencing reform, and state and local justice assistance. Within these themes, the report examines more specific issues that confronted the 111th Congress. Issues discussed under the umbrella of violent crime control include hate crimes, gangs, and gun control. Issues related to the federal government's efforts to combat fraud and theft include identity theft and organized retail crime. A perennial drug control issue discussed is that of drug trafficking. Congress also considered sentencing reform issues such as disparities in crack and powder cocaine sentencing as well as early prison release. With respect to state and local justice assistance, issues regarding the adequacy of federal assistance grants to state and local law enforcement--via the Community Oriented Policing Services (COPS) Program--and the proposal of a new witness protection grant program as well as juvenile justice are discussed.

Political instability in Georgia appeared to worsen in November 2007 after several opposition parties united in a "National Council" that launched demonstrations in Tbilisi, the capital, to demand that legislative elections be held in early 2008 as originally called for instead of in late 2008 as set by the government-dominated legislature. The demonstrations had been spurred by sensational accusations by former defense minister Irakli Okruashvili against President Mikheil Saakashvili (including that Saakashvili ordered him to commit murder). Calls for Saakashvili's resignation intensified after Okruashvili claimed that he had been coerced by the government to recant the accusations. On November 7, police and security forces forcibly dispersed demonstrators, reportedly resulting in several dozen injuries. Security forces also stormed the independent Imedi ("Hope") television station, which had aired opposition grievances, and shut it down. Saakashvili declared a state of emergency for 15 days, giving him enhanced powers. He claimed that the demonstrations had been part of a coup attempt orchestrated by Russia, and ordered three Russian diplomats to leave the country. U.S. and other international criticism of the crackdown may have influenced Saakashvili's decision to step down as president on November 25, 2007, so that early presidential elections could be held on January 5, 2008, "because I, as this country's leader, need an unequivocal mandate to cope with all foreign threats and all kinds of pressure on Georgia." At the same time, he called for a plebiscite on whether to have a spring or fall legislative election and on whether Georgia should join NATO. Legislative Speaker Nino Burjanadze became acting president. She called on prosecutors to drop charges against Imedi. It renewed broadcasts on December 12, and became for a time the main television outlet for opposition candidates in the election (see also below). Significant amendments to the electoral code were adopted in late November and mid-December to make elections more democratic, including by adding some opposition party representatives to electoral commissions. However, the adoption of new rules shortly before the election sometimes resulted in haphazard implementation, according to the Organization for Security and Cooperation in Europe (OSCE), which monitored the electoral process. Most observers considered the nomination process for presidential candidates to be inclusive and transparent. Besides Saakashvili, six other candidates were successfully registered (see Table 1). Among the campaign pledges made by the candidates, Saakashvili ran on his claimed record of reducing corruption and crime and improving living conditions, and pledged to further reduce poverty and to restore Georgia's territorial integrity peacefully. Levan Gachechiladze stated that he would work to create a parliamentary system of rule with a constitutional monarchy, nominate former foreign minister Salome Zourabichvili as the prime minister, and encourage private enterprise and poverty alleviation. Davit Gamqrelidze pledged to consider backing either a parliamentary system or constitutional monarchy, and to bolster freedom of speech, personal property rights, and an independent judiciary. Shalva Natelashvili pledged to boost social services and called for a parliamentary system. The Harvard-educated Giorgi Maisashvili stressed business creation. All the candidates except Irina Sarishvili-Chanturia and prominent businessman Badri Patarkatsishvili called for Georgia to seek membership in NATO. Sarishvili-Chanturia urged voters to either vote for her or other candidates she favored. Patarkatsishvili called for abolishing the presidency, creating a confederation with a weak central government, and establishing close ties with Russia. He pledged to use his fortune to provide unemployment benefits and some free utilities to the poor. Mass rallies were prominent in the campaign, and several candidates toured the country. In contrast, Patarkatsishvili faced charges of involvement in a coup attempt linked to the November demonstrations and conducted his campaign from abroad. Most observers considered much of the campaigning as focused on accusations rather than issues. Perhaps the most sensational event of the campaign occurred in late December, when the government released recordings which it claimed incriminated Patarkatsishvili in yet another coup planned for after the election. Patarkatsishvili denied planning a coup and called on journalists to defend him. He also stated that he would step down as a candidate, but later reversed course. Staff at Imedi, which was at least partially owned by Patarkatsishvili, decided to temporarily halt transmissions on December 26. The Central Electoral Commission (CEC) reported that 56.2% of 3.35 million registered voters reportedly turned out and that Saakashvili received enough votes (over 50%) to avoid a legally mandated second round of voting for the top two candidates (preliminary results; see Presidential Election Results ). On the plebiscite issues, 77% of voters endorsed Georgia joining NATO and almost 80% supported holding legislative elections in spring 2008. An effort by the government to conduct balloting in Georgia-controlled areas in South Ossetia was denounced by officials in the breakaway region with the claim that almost all residents are citizens of Russia. Saakashvili's performance at the polls benefitted from a growing economy and a boost in social services provided by the government. His pledge of greater efforts to alleviate poverty also may have helped ease some grievances against his rule, according to many observers. The fractiousness of some of the opposition, which could not agree on a single candidate, was a major factor in the results. A preliminary report by observers from the OSCE, the Parliamentary Assembly of the Council of Europe (PACE), and the European Parliament (EP) assessed the election as "in essence consistent with most ... commitments and standards for democratic elections, [although] significant challenges were revealed...." Several positive aspects of the election were listed, including that the race offered a competitive choice of candidates. Negative aspects included "pervasive" violations that were "not conducive to a constructive, issue-based election campaign." These included the use of government offices to support Saakashvili, "substantiated" instances in which officials harassed opposition campaigners, allegations that state employees were ordered to vote for Saakashvili, the use of social services to gain support for Saakashvili, and a tendency toward pro-Saakashvili bias by the CEC in resolving complaints. The monitors viewed the vote count more negatively, with a significant number assessing it as bad or very bad. The preliminary report argued that electoral abuses varied from region to region, appeared often due to incompetence or local fraud, and stopped short of organized and systematic manipulation. The CEC and the courts eventually invalidated or corrected the results in 18 of 3,511 voting precincts. Among other assessments of the election, the prestigious Georgian NGO, Fair Elections, reported on January 10 that its exit polling at 400 precincts appeared to indicate that Saakashvili may have won enough votes to avoid a runoff, even if there were voting irregularities. U.S. analyst Charles Fairbanks, however, argued on January 16, 2008, that the balloting reported for Saakashvili was inflated, so that it was "unlikely" that he won in the first round. Although no Russian election observers were invited, the Russian Foreign Ministry asserted on January 6, 2008, that the election "could hardly be called free and fair," including because "the campaign was accompanied with the extensive use of administrative resources, unconcealed pressure on opposition candidates and rigid limits on their access to financial and media resources." Many observers regarded the relative peacefulness of the election campaign (compared to the November 2007 violence) as a positive sign that at least fitful democratization might be preserved in Georgia. Among other possible signs of progress toward democratization and stability, Saakashvili in his inaugural address on January 20, 2008, pledged to facilitate greater opposition participation in political decision-making. Some analysts also suggest that opposition parties and politicians might have benefitted from the campaign by becoming better known and might gain votes in upcoming legislative elections, thereby enhancing political pluralism. These observers suggest that opposition parties and politicians will soon shift from protesting the results of the presidential race to campaigning for a prospective May 2008 legislative election. In the economic realm, these observers suggest that Saakashvili's re-election reassured international investors that Georgia has a stable investment climate, although boosted social spending could increase short-term inflation. The Secretary General of the Council of Europe (COE) on January 6 urged opposition politicians to eschew "immature" rabble-rousing and to "show responsibility, political maturity and respect for the democratic process" by working through constitutional procedures to address electoral irregularities. Thousands of people reportedly turned out on January 13 and January 20 to peacefully protest against what they considered a fraudulent election. Gachechiladze and other leaders of the National Council asserted that Saakashvili did not win enough votes to avoid a run-off, where he would have faced a single opponent (Gachechiladze). Many observers argue that Saakashvili's electoral victory with 53% of the vote contrasts sharply with the 96% of the vote he won in 2004 and illustrates that public trust in his governance has declined. One Georgian analyst has suggested, however, that despite this decline in public trust, many citizens remembered the disorder of past months and years and were fearful of voting for opposition candidates who promised radical political and economic changes if elected. The risk of disorder could greatly increase if public trust further declines as the result of a tainted prospective May 2008 legislative election. Saakashvili's win appeared to be a further blow to Russia's hopes of restoring its influence in Georgia, according to many observers. These observers also raise concerns that Saakashvili's campaign pledge to soon unify Georgia (although he called for peaceful measures) could contribute to further tensions with Russia. In his inaugural address, however, Saakashvili attempted to reassure Russia that Georgia was intent on repairing bilateral ties. One Tajik analyst has suggested that Saakashvili's re-election provides a positive example to reform-minded politicians in Russia and other Soviet successor states and threatens non-reformist governments in these states. On November 8, 2007, the U.S. State Department welcomed President Saakashvili's call for early presidential elections and a plebiscite on the timing of legislative elections. At the same time, it urged Saakashvili to relinquish emergency power and to "restore all media broadcasts" to facilitate a free and fair election, and urged all political factions to "maintain calm [and] respect the rule of law." Deputy Assistant Secretary of State Matthew Bryza visited Tbilisi on November 11-13 with a letter from Secretary of State Condoleezza Rice that listed these and other proposals "to restore [the] momentum of democratic reform" in Georgia, highlighting U.S. interest in Georgia's fate. He argued that while in the past the United States had focused on Georgia as a conduit for oil and gas pipelines to the West and on security assistance, "today what makes Georgia a top tier issue for the U.S. government is democracy." He held extensive talks with government and opposition politicians to urge them to moderate their mutual accusations and to make compromises necessary for democratic progress. He also stressed that "the United States remains a firm supporter [of] Georgia's NATO aspirations," and called on unnamed NATO allies to await further political developments in Georgia before deciding whether or not the country is eligible for a Membership Action Plan (MAP). Some observers have suggested that NATO's possible consideration of a MAP for Georgia may well be delayed beyond the April 2008 NATO Summit in Bucharest, Romania, for reasons that include assessing Georgia's performance in holding a prospective May 2008 legislative election. Just after the January 5 balloting, the State Department "congratulated" the people of Georgia for an election that many international observers considered "was in essence consistent with most OSCE and COE commitments and standards." However, the State Department also raised concerns about reported electoral violations and urged that they be thoroughly investigated and remedied. U.S. ambassador to Georgia John Tefft likewise appeared cautious when he stated on January 10 that the United States had not yet reached an "official political assessment" of the election, so had not congratulated a winner. After the CEC announced the final election results, President Bush on January 14 telephoned Saakashvili to congratulate him, and dispatched U.S. Commerce Secretary Carlos Gutierrez to the inauguration. Some opposition supporters in Georgia criticized the United States for recognizing Saakashvili's win, perhaps reflecting some potential increase in anti-Americanism, but at an opposition protest at the U.S. Embassy on January 22, only one of the parties involved in the National Council participated. Many in Congress long have supported democratization and other assistance to Georgia, as reflected in hearings and legislation. The 110 th Congress ( P.L. 110-17 ) urged NATO to extend a Membership Action Plan for Georgia and designated Georgia as eligible to receive security assistance under the program established by the NATO Participation Act of 1994 ( P.L. 103-447 ). Indicating ongoing interest in Georgia's reform progress, on December 13, 2007, the Senate approved S. Res. 391, which urged the U.S. President to publically back free and fair elections in Georgia. In introducing the resolution, Senator Richard Lugar averred that he was "a strong friend of the Georgian people," and that the resolution indicated "our strong hopes that ... Georgia will return to the democratic path and embrace a free and fair election process." He also urged Georgia to facilitate the work of international election monitors, particularly those from the OSCE. Representative Alcee Hastings was appointed as Special Coordinator by the OSCE Chairman-in-Office to lead a mission of nearly 500 short-term observers who monitored the January 5 election. The day after the election, Representative Hastings reportedly stated that he viewed the election as a "viable expression of free choice of the Georgian people," but he also cautioned that Georgia's "future holds immense challenges" because of the high degree of mistrust and polarization in Georgian society. Similarly, former Representative Jim Kolbe, who led a delegation from the International Republican Institute, evaluated the election as broadly free and fair, but called for further reforms.

This report discusses the campaign and results of Georgia's January 5, 2008, presidential election and implications for Russia and U.S. interests. The election took place after the sitting president, Mikheil Saakashvili, suddenly resigned in the face of domestic and international criticism over his crackdown on political dissidents. Many observers viewed Saakashvili's re-election as marking some democratization progress, but some raised concerns that political instability might endure and that Georgia's ties with NATO might suffer. This report may be updated. Related reports include CRS Report RL33453, Armenia, Azerbaijan, and Georgia: Political Developments and Implications for U.S. Interests, by [author name scrubbed].

A dramatic collapse in farm milk prices late in 2008, which resulted in severe financial stress for many dairy farmers, led to efforts in 2009 by both Congress and the Administration to provide assistance for milk producers. The U.S. Department of Agriculture (USDA) reactivated dairy export subsidies in May and temporarily raised dairy product price supports in July, among other actions. In October, Congress provided $350 million in the FY2010 Agriculture appropriations act ( P.L. 111-80 ) to supplement the assistance provided under existing dairy programs. Market dynamics in 2009 have also generated concerns about "dairy pricing" and the adverse effects of milk price volatility on farmers. Dairy pricing is shorthand for the process of establishing the farm value of milk. The federal government plays a prominent role in that process. This report describes dairy pricing and examines several related issues. Among the related issues are (1) how milk producers receive price signals under existing policy and how that affects production decisions, (2) farm milk price variability and managing price risks, and (3) the farm share of retail prices for dairy products and whether retail prices track changes in the farm milk price. The report concludes with a discussion of alternative approaches that the dairy industry is proposing as a way to deal with dairy pricing. Price movements for milk and other commodities have several components. First, "trend" is the long-term movement in prices. For agricultural commodities, prices adjusted for inflation typically trend downward, primarily because improvements in agricultural productivity reduce costs and increase supplies. Second, a seasonal component is one that results in higher or lower prices during different periods of the year. For example, the supply of milk increases and prices tend to decline in the spring, when cows are highly productive. Third, cyclical price movement refers to highs and lows established over any particular period with regularity. This is the type of price movement at the crux of today's concern for dairy farmers. Dairy economists generally agree that the current cyclical price movement for dairy farmers was created by a mismatch in demand and supply. Simply put, milk output in late 2008 and 2009 was greater than milk demand, and prices adjusted downward in order for dairy products to sell or "clear the market" ( Figure 1 ). The lower prices also provided a signal to producers that market needs had declined and they should cut milk production, either by culling cows or by reducing feed inputs. According to dairy forecasters, supply adjustments and a modest improvement in demand helped lift farm milk prices in fall 2009, and further (modest) gains are expected in 2010. The 2009 experience has been particularly painful for milk producers because prices had been at a record high in 2007-2008 and then fell sharply, with monthly average prices dropping nearly 25% below the long-term average. In the past, prior to reductions in the price support levels in the 1980s, farm milk prices were very stable, resting atop support prices and leaving little price uncertainty for producers. It was not until the late 1980s and into the 1990s that year-to-year prices began to fluctuate significantly. Over the last 10 years, as the dairy industry has become more dependent on export markets and world dairy prices have remained generally above U.S. support price levels, the volatility in farm milk prices has likely been enhanced by supply and demand changes in the world market. Historically, dairy programs provided a significant amount of stability in farm milk prices, particularly during the 1970s and early 1980s. During this period, support prices for milk were ratcheted up to levels high enough to prevent farm prices from dropping significantly. With low year-to-year price volatility, dairy farmers had little need for managing price risk. In the mid-1980s, to reduce costs associated with purchasing dairy products, Congress reduced price supports in periodic omnibus farm bills. In the years that followed, supply and demand factors generally took the price support program out of marketing order pricing equations, and year-to-year price variability increased ( Figure 1 ). Subsequently, the dairy industry devoted more time and effort to developing export markets to handle a growing share of its output. Together, these two developments have opened the domestic market to transmissions of price volatility from the world market. Increasing volatility in dairy producer prices has led to a greater demand from dairy farmers for managing price and/or revenue risks. Dairy farmers who are members of cooperatives benefit from risk management practices employed by their cooperatives through higher net milk prices or patronage dividends. Such risk management practices include shifting production between plants or product types in order to receive the highest return, integrating into the consumer and niche markets to diversify away from commodity market volatility, and forming partnerships with other firms to shift business risk. For a dairy farmer, the risk associated with the output (farm milk) is only part of his or her exposure to market risk. Feed prices are subject to constant change, and high feed costs contributed significantly to the 2008/2009 price-cost squeeze many milk producers faced. Managing the risks associated with changes in both output and input prices can be critical to survival of any firm, agricultural or otherwise. Producers across the agricultural sector can, and to varying degrees do, use futures markets to guard against financial losses when market prices change. A futures contract is an agreement to either buy or sell a given commodity at a specific price at a specific time in the future. Futures contracts are available for many agricultural commodities, including major crops, crop products (like soybean meal), livestock, milk, and dairy products. A wide variety of other commodities (or financial instruments) are also traded on futures exchanges, including metals, lumber, and currencies. Farmers who produce milk (or another commodity) can protect against the prospect of declining prices by selling a milk futures contract on the CME. If prices in the future in fact decline, the farmer will realize a profit on the trade when the original contract is eventually liquidated (i.e., when the farmer buys another contract of the same kind to offset the first contract). The farmer adds any profit generated from this set of transactions to the actual value of milk he or she sells. If prices in the futures market rise instead of fall, the farmer will realize a loss in the futures market, but these losses can be offset by gains in the value of milk the farmer is selling, because the cash market and futures market tend to move in the same direction. By using such a strategy (called "hedging"), farmers can "lock in" a predetermined price for milk they produce. A similar strategy can be employed to lock in favorable prices of key feed inputs, such as corn and soybean meal. Farmers--particularly large-scale operators with milk volumes that match the size of available futures contracts--may hedge directly on the exchanges. Some farmers also have opportunities to hedge their production through their cooperatives on a scale suitable to their operation. A good hedge for a farmer depends on a somewhat predictable "basis," which is the difference between the futures market price and the local cash price. Without a reasonable basis pattern, a gain or loss in the futures market may not actually reduce a farmer's overall price risk. Volatility could be amplified if the loss in one market (futures or cash) is not offset by a gain in the other. Observers have pointed out that hedging milk production is complicated by the nature of cash milk pricing. For a dairy farmer, the cash price is often the "mailbox price," which is an average price based on many factors, among them marketing order prices, utilization amounts, plant and marketing agency premiums and adjustments for quality, hauling costs, and volumes sold. As such, the cash price may or may not be connected directly to the available futures prices for milk (e.g., the Class III milk futures traded on the CME), making hedging potentially problematic for dairy farmers. Nevertheless, congressional testimony has indicated that some farmers who pursued milk hedging strategies have received net milk prices substantially above market lows in 2009. Some proprietary plants offer programs for farmers to lock in their selling price before delivery (called a "forward contract"). Prior to implementation of the 2008 farm bill ( P.L. 110-246 ), handlers were required to pay at least the minimum prices established by the federal marketing orders each month, which dampened participation. Under the 2008 farm bill, dairy farmers can enter into forward contracts with handlers for milk purchased for manufacturing uses without following the minimum pricing rules. Another option dairy producers can use to manage price risk is the Livestock Gross Margin for Dairy Cattle insurance policy (LGM for Dairy Cattle), which provides protection against the loss in gross margin (market value of milk minus feed costs). At the end of an 11-month insurance period, producers receive an indemnity if the actual gross margin is less than the guarantee. The policy uses futures prices for corn, soybean meal, and milk to determine the actual and guaranteed margins (local milk prices are not used for the calculations). Producers are eligible in more than 35 states. LGM and a large array of crop insurance products are administered by USDA's Risk Management Agency (RMA). Farmers purchase LGM polices from private crop insurance agents. LGM for Dairy Cattle became available in 2008. Producers are still learning how it works and how it might be useful for them, so participation remains low. Observers say another factor affecting participation is the cost of the policy. Unlike crop insurance products, the producer pays the full premium on the LGM policy. For crop policies, the federal government pays on average nearly 60% of the total cost of the premium. Producer subsidies on crop insurance products have been credited with helping greatly expand participation, with insured acreage as a share of total plantings ranging between 77% and 95% for major crops. A separate pricing issue concerns the relationship between farm and retail prices. As farm prices of milk and other agricultural commodities fell in late 2008, retail food price declines were slow to follow. This decreased the farm value share--the portion of the retail dollar that flows to the farmer--and caused some in Congress to question whether processors and retailers were contributing to economic stress in the agricultural sector, particularly for dairy farmers. In recent decades, across the agricultural sector, several factors have led to a declining farm share of the retail food dollar, including gains in agricultural productivity, growth in demand for value-added products, and changes in food marketing. The farm share of the retail food dollar for all farm products (not just dairy) was 41% in 1950, a time when many food products were sold with much less value-added processing or packaging than today. In 2006, USDA estimated that the average farm-value share of all food products of U.S. farm origin consumed was 18.5%. The remaining 81.5% was accounted for by a host of marketing factors, including labor (processing and retail sectors), packaging, profit, transportation, energy, and other business expenses. For dairy products, the farm share is approximately one-third of the retail dollar, which is greater than the all-food average, largely because other food categories such as cereals and bakery products have a higher overall degree of processing. Examining changes in monthly farm and retail prices during 2008 and early 2009 indicates a decline in the farm-value share of retail product values and a widening of the marketing margin. Between July 2008 and December 2008, the farm price of milk reported by USDA fell by $0.33 per gallon ( Figure 2 ). Meanwhile, the average retail milk price fell only $0.28, with the difference between the retail and farm price (i.e., the marketing margin) increasing to $2.35 per gallon. In January 2009, the difference between the average retail price of milk and the farm price of milk reached a record-high $2.43 per gallon ( Figure 3 ). However, as retailers cut prices amid lower costs for farm milk and other inputs (e.g., energy and transportation), the difference between farm and retail prices declined in September 2009 to $1.89 per gallon, which is below the recent five-year average margin. The decline in late summer/early fall means that producers are receiving a greater share of the retail dollar as retail prices retreat, although the farm share remains below year-ago levels. Retail milk and dairy product prices have retreated significantly from dramatic highs in 2007 and 2008. In addition, they have declined more sharply than overall food prices, as measured by the Consumer Price Index ( Figure 4 ). Dairy pricing in the United States is a unique combination of both market-based and administered (through public dairy policies or programs) prices. Each influences the other to determine the overall level of farm milk prices as well as price movements to some extent. Two characteristics--perishability and production on a daily basis--create challenges for pricing and marketing milk (and the products made from it). As a result, in the short run, production in excess of demand in the fluid market must be either dumped (much like unharvested fresh fruit left in orchards) or manufactured into storable dairy products and sold later. Market-based pricing for milk and dairy products is similar to that for many other agricultural commodities, in that primary mechanisms for price discovery like cash and futures markets, such as those located at the Chicago Mercantile Exchange (CME), play key roles. In general, current and future price levels for milk and dairy products are largely determined by buyers and sellers of milk and dairy products based on their perceptions of overall demand and supply conditions, along with expectations for changes in government policy (e.g., dairy product support prices). Wholesale cash prices for dairy products (cheese, butter, and nonfat dry milk) are determined daily at the CME. The prices written into contracts nationwide between dairy manufacturers and wholesale or retail buyers of basic dairy products often reflect CME prices. Some dairy producers say that cash market pricing on the CME works to the detriment of producers (see " Potential for Price Manipulation ," below). Separately, milk and dairy product futures contracts are also traded in Chicago. Individuals and firms that face financial risk from movements in dairy prices can use futures contracts to manage their risk and offset potential losses in the cash market for dairy products (see " Using Futures Markets ," above). Administered farm milk prices are derived from two government policies: the dairy product price support program (DPPSP) and federal milk marketing orders (FMMOs). The two policies originated at least 60 years ago and operate independently until market prices decline to support levels. The DPPSP simply provides price support for dairy farmers through government purchases of dairy products at legislated minimum prices. In contrast, the FMMO system generally does not support prices but is designed to stabilize market conditions, which had been chaotic in the 1920s and early 1930s, through monthly, market-based minimum prices that processors must pay for farm milk. FMMOs also provide a pricing system for sharing farm revenue across producers in certain geographic areas and for balancing marketing power between milk handlers, who reportedly held an advantage prior to FMMO development, and farmers. The role of the federal government in milk pricing is greatest when overall prices for milk and dairy products are relatively low and the government purchases dairy products. In this way, the DPPSP undergirds minimum prices in the federal milk marketing order system. Under the DPPSP, the federal government stands ready to purchase unlimited amounts of butter, American cheese, and nonfat dry milk from dairy processors at specified minimum prices. Purchases under the DPPSP, which occurred during FY2009, essentially prevent market prices for dairy products (and hence milk prices received by farmers) from dropping below support levels. In contrast, when the three product prices are above support levels, the DPPSP is not a factor in the market and farm milk prices reflect prevailing supply and demand conditions. Year-to-year changes in farm milk prices have increased since the mid-1990s because price support levels have been reduced below typical market-average prices. FMMOs mandate minimum prices that processors in milk marketing areas must pay producers or their agents (like the dairy cooperatives) for delivered milk depending on its end use, regardless of whether market prices are high or low. Minimum milk prices are based on current wholesale dairy product prices collected by USDA's National Agricultural Statistics Service in a weekly survey of manufacturers, which are determined in large part by prices established on the CME. As such, FMMO minimum prices rise and fall each month with overall changes in the dairy product market. Under marketing orders, the price farmers receive for their milk is calculated based on these minimum prices and on how milk is utilized (fluid vs. manufacturing) in the marketing order, which collectively is called "classified pricing." FMMOs also address how market proceeds are distributed among the producers delivering milk to federal marketing order areas--called "pooling"--whereby all farmers receive a "blend price" each month based on order-wide revenue. The blend price is the weighted average price in a marketing order, with the weights being the volume of milk sold in each of the four classes. Under FMMOs, the farm price of approximately two-thirds of the nation's fluid milk is regulated in 10 geographic marketing areas. Some states, California being the largest, have their own milk marketing regulations instead of federal rules. Marketing orders were created in the 1930s to balance market power between farmers and milk handlers while reducing "destructive competition" between milk producers that can drive down prices to their mutual detriment. Milk prices at the farm level reflect the minimum prices paid by handlers under the marketing orders, plus any premiums generated from local supply/demand factors, such as a seasonal mismatch between supply and demand or special retail promotions, minus costs such as transport and marketing charges. In contrast, retail product prices are not regulated by the FMMO system. Instead, they reflect what retailers pay for dairy products from manufacturers and the level of competition among retailers in local markets. Cooperatives play an important role in dairy pricing. A cooperative is an enterprise owned by and operated for the benefit of those using its services. Farmer-owned dairy cooperatives often operate a complete milk distribution system, procuring raw milk from the farm, routing it where needed, managing or coordinating movements of processed or manufactured products, and managing surplus milk. Cooperatives also bargain for prices with milk handlers and represent their members in the rulemaking processes for changing marketing orders. Dairy farmers typically sign one- to three-year contracts to market their entire production through the cooperative in exchange for marketing services. Besides guaranteeing members a market for their milk, some dairy cooperatives manage price risks by operating multi-product, multi-plant operations, using their flexibility to shift production from one product to another in an effort to obtain the highest return for the farmer-members. When prices of agricultural (or other) commodities rise, producers tend to increase their output to increase profit. Alternatively, when prices are falling, they focus on trimming costs to save money, thereby reducing production. At some point, the price cycle (with prices either rising or falling) reverses course as supply becomes more aligned with demand. The points at which farmers see these price incentives and when they take action affects overall production levels and price movements going forward. For most milk producers in the United States, the "mailbox price" is what farmers receive for their milk in a monthly check from the handler or their cooperative. It is the net price received after adjustments for quality, marketing costs (e.g., hauling charges, cooperative dues, producer assessments), and over-order premiums that arise when market prices rise above the marketing order minimums. Dairy farmers make production decisions--to buy or raise more cows or send some to the slaughterhouse--based in large part on their monthly revenue or expected revenue in the future. Feed and other input costs, including debt service, also play a large part in whether to expand or contract. The biggest factors driving the changes in prices producers receive month-to-month are the minimum FMMO prices handlers must pay for milk. USDA calculates the FMMO prices using wholesale product prices as input into formulas that have been established through the regulatory process. For a more detailed description of the FMMO system, see CRS Report R40205, Dairy Market and Policy Issues . Three pricing issues with respect to market signals for dairy farmers are timing, clarity, and the "make allowance," or margin afforded to dairy manufacturers in the federal order minimum prices. FMMO prices are issued by USDA each month for each class of milk (depending on its use) as data on wholesale prices become available. For a specific FMMO month, minimum prices for fluid milk (Class I) are announced in advance (by the 23 rd of the previous month). For other classes of milk, prices are announced after the close of the FMMO month. Shortly thereafter, mailbox prices are calculated once the marketing order pools close (i.e., monthly volumes and values are tabulated) and each of the 10 FMMO administrators determines the overall order "blend" price. The process of establishing monthly prices dates to the beginning of the marketing order system in the 1930s. Previously, day-to-day or week-to-week price fluctuations created enormous price uncertainty for dairy farmers. A monthly price system, along with other features of milk marketing orders, helped create a more stable price environment. Farmers could better manage their business decisions when they knew with certainty the price they would receive. A criticism of current FMMO pricing stems from this effort to stabilize the market. Some market participants, including dairy manufacturers and, on occasion, milk producers, claim that the system does not transmit price signals quickly enough, particularly in today's fast-changing market. For example, suppose domestic or foreign demand for milk or dairy products declines in April. The negative market signal could take until late June to reach milk producers, delaying the response of producers to begin slowing production to more closely align with demand. Conversely, when dairy product prices rise rapidly, the production response, now in the upward direction, can be delayed to the extent that farmers base their expansion on their mailbox price. The pooling function in milk marketing orders is designed to reduce destructive competition and allow all producers to benefit from higher prices of fluid milk (relative to other uses). At the same time, however, some in the industry suggest that pooling can have the unfortunate consequence of muting marketing signals. When revenues are pooled across the marketing region (both geographically and by how milk is utilized), critics argue, individual producers do not have a direct market signal of risks associated with production, a situation that can encourage excessive growth in production when prices are low. To calculate minimum milk prices in the FMMO system, USDA starts with survey data collected from dairy manufacturers. USDA's National Agricultural Statistics Service calculates average dairy product prices from these weekly data. Next, USDA's Agricultural Marketing Service subtracts a "make allowance"--an estimate of the manufacturer's cost of processing milk into dairy products--to arrive at the monthly minimum prices. USDA periodically revises make allowances, most recently in October 2008 to reflect higher energy costs for manufacturers, following a lengthy regulatory process involving all parties. The make allowance mathematically reduces average product prices used to calculate minimum farm milk prices. Some producers feel that the make allowance unfairly reduces the minimum milk prices set under the FMMOs. Manufacturers say the make allowance is simply the cost of processing milk into dairy products, and calling it a cost to farmers misrepresents the economics of producing dairy products. The controversy for some is that the make allowance for each dairy product is a fixed amount (at least until changed in the regulatory hearing process). It does not change when dairy product markets strengthen or weaken, leaving essentially a fixed margin for manufacturers, regardless of their relative efficiencies. As a result of this inflexibility, changes in the market are reflected to a greater degree in farm prices or in the margins seen by firms that come downstream from the manufacturer (i.e., broker, wholesaler, or retailer). At times, this can be a detriment to farmers when prices are declining because manufacturers' margins may be held artificially wide, forcing down minimum prices below what they otherwise would be. Conversely, a fixed margin may benefit producers when manufacturers' actual margin (based on real-time costs such as energy) is greater than the make allowance. In this case, FMMO minimum prices would be above the level that would be calculated using actual costs. The primary cash market for dairy products is located at the CME, where cheese, butter, and nonfat dry milk are traded. Actual quantities traded are quite small, but prices determined by buyers and sellers at this market are used to establish wholesale price contracts across the country, subject to premium and discounts for factors such as quality and transportation. Wholesale dairy product prices are then used to set monthly minimum prices under the federal orders. Some dairy producer groups believe that the CME is an inadequate pricing mechanism because the market is too thinly traded, lacks transparency and sufficient oversight, and creates a highly volatile market that adversely affects producers. The U.S. Government Accountability Office concluded in a 2007 study that "certain market conditions at the CME spot cheese market, including a small number of trades and a small number of traders who make a majority of trades, continue to make this market particularly susceptible to manipulation." However, the report also noted that if price manipulation were to occur, some industry participants claim it would be short-lived because many large participants in the cheese and dairy industry with diverse interests monitor the market and are prepared to participate in it. Reportedly, they would begin trading once prices became disconnected from underlying supply and demand conditions, potentially counteracting any attempted price manipulation. Nevertheless, some industry participants want sales volume to increase on the CME, thereby reducing the possibility of price manipulation. The Commodity Futures Trading Commission (CFTC) and the CME itself monitor activities of the spot market participants for signs of price manipulation. In December 2008, several dairy industry participants agreed to pay a civil monetary penalty for attempting to manipulate milk futures prices through purchases of cheese on the CME in 2004. While dairy markets appear to be rebounding from low farm milk prices of summer 2009, the dairy industry and policymakers continue to consider how the dairy pricing system might be improved. The House and Senate have held hearings on dairy policy and pricing in 2009. The Administration is also collecting information through USDA's establishment of a Dairy Advisory Committee, which is to review issues of farm milk price volatility and suggest to the Secretary of Agriculture how USDA can best address these issues. The committee is to "develop changes to the dairy pricing system to avoid the boom and bust cycle facing dairy famers this year." As Congress, the Administration, and the dairy industry consider how possibly to revise the dairy pricing system, two schools of thought appear to be emerging. One is to reduce price volatility through some means of supply control while raising farm prices. The other is to allow the market to fluctuate and help farmers manage the resulting price risk through hedging strategies used by farmers in other parts of the agriculture sector. A number of organizations are also examining potential changes to various aspects of the federal dairy programs. Supply control is a way for government to influence the supply of farm products on the market with the intention of increasing or stabilizing farm prices. One dairy producer group, Holstein Association USA, has proposed a plan to stabilize farm milk prices with assessments on farmers who increase milk production over specified levels, as determined by USDA forecasts of demand for fluid milk and manufactured dairy products. Some of the program's objectives are to reduce the volatility of dairy product prices and producer milk prices while preventing severely depressed producer milk prices. The National Farmers Union (NFU) is among the supporters. Supply control is also affected by imports. Legislation has been introduced in both the House and the Senate in 2009 to apply import controls on specific dairy products. The Milk Import Tariff Equity Act ( S. 1542 and H.R. 3674 ) would impose tariff-rate quotas on imports of casein (the main protein found in milk) and milk protein concentrates. Some believe a change in federal milk marketing orders also could be used to stabilize the milk market and boost dairy farm returns. One bill in the 111 th Congress, the Federal Milk Marketing Improvement Act of 2009 ( S. 1645 , first introduced as S. 889 ), is designed to "help farmers get a fair price for their milk" and provide relief and assistance to dairy farmers by using the cost of milk production as the basis for pricing milk. The bill contains provisions for USDA to administratively reduce prices received by farmers, in an effort to limit milk production, if the Secretary of Agriculture determines that an excess amount is being produced for the national domestic market. Supporters of price stabilization and supply control say that incentives within the dairy industry to overproduce need to be offset by a program to control supplies in a more measured way. Critics contend that supply control could reduce the competitiveness of the U.S. dairy industry, limit its incentive to innovate, and raise consumer prices because, they argue, a pricing system based on supply control and/or cost of production potentially rewards inefficiency. Critics also argue that administratively matching supply and demand can be difficult because the process would require accurate forecasts of demand and supply factors that are notoriously fickle. Other industry groups, including the National Milk Producers Federation (NMPF), the largest trade association representing milk producer cooperatives, prefer a more market-based approach for addressing milk pricing issues, along with changes to existing dairy programs as part of an overall adjustment to federal dairy policy. The NMPF proposes a new dairy producer income insurance program that would make indemnity payments when operation losses occur (similar to a revenue insurance program) and reform of the federal milk marketing order system, specifically the provisions for calculating minimum farm milk prices and the existing price discovery mechanism. The organization also advocates discontinuing the dairy product price support program in order to speed up market adjustments. Promoters of a market-based approach, including dairy food manufacturers, say that price volatility will be a part of the dairy industry, as it is for other commodities. As such, they claim the best approach is to find ways for producers to manage price risks without limiting the industry's ability to capitalize on domestic and international demand opportunities. Detractors expect that incentives to overproduce will aggravate the financial woes of the dairy industry indefinitely, so controlling potential price variability with supply management is necessary for long-term financial health for producers. This concern for overproduction could and has been applied to commodities such as corn and wheat. But dairy generally is more susceptible to overproduction, some dairy producers say, because current policy encourages producers to maximize production and they tend to add cows even when prices are low to improve cash flow. Current policy is set for the dairy product price support program until 2012 under the 2008 farm bill, and federal milk marketing orders are permanently authorized. However, given the difficult economic situation dairy farmers experienced in 2009, Congress may continue to monitor the dairy pricing situation through hearings and oversight. Efforts to address dairy pricing issues could be affected by the future direction of market prices. The current farm milk price cycle appears to have bottomed out in summer/early fall 2009, based on forecasts by USDA and others. If the forecasts hold, it may be difficult for policymakers and producers to support major policy changes while milk prices are climbing. In the view of some, any further intervention could disrupt an otherwise favorable price situation. In any event, discussions and policy proposals on dairy pricing may continue to be a topic of discussion in the 111 th Congress or in the next farm bill debate, which may begin as early as 2011.

A dramatic collapse in farm milk prices late in 2008, which resulted in severe financial stress for many dairy farmers, has generated congressional concerns about "dairy pricing" and the adverse effects of milk price volatility on farmers. Dairy pricing refers to the process of establishing the farm value of milk. The federal government plays a prominent role in that process. Among the dairy pricing issues are how milk producers receive price signals under existing policy and how that affects their production decisions. Some market participants say that the system does not transmit price signals to milk producers quickly enough, which can delay the response of producers needed to correct market imbalances. Another issue is farm milk price variability and managing price risks, given declines in dairy price supports and increased dependence on exports over the years, which have contributed to greater price volatility. Finally, some observers are concerned about the farm share of retail prices for dairy products and whether retail prices track changes in the farm milk price. The difference between farm and retail prices has declined in recent months after increasing in late 2008. Dairy pricing in the United States is a unique combination of market-based and administered (through public dairy programs) prices. Each influences the other to determine the overall price level and price movements to some extent. Two characteristics--perishability and production on a daily basis--create challenges for pricing and marketing milk (and the products made from it). Market-based pricing for milk and dairy products is similar to many other agricultural commodities, in that primary mechanisms for price discovery like cash and futures markets, such as those located at the Chicago Mercantile Exchange (CME), play key roles. Wholesale cash prices for dairy products (cheese, butter, and nonfat dry milk) are determined daily at the CME. The prices written into contracts nationwide between dairy manufacturers and wholesale or retail buyers of basic dairy products often reflect CME prices. Some producers have raised concerns about limited trading volumes and the potential for price manipulation at the CME. Administered farm milk prices are derived from two government policies that originated more than 50 years ago: the dairy product price support program (DPPSP) and federal milk marketing orders (FMMOs). The two policies operate independently until market prices decline to support levels. The DPPSP simply provides price support for dairy farmers through government purchases of butter, American cheese, and nonfat dry milk from dairy processors at legislated prices. In contrast, the FMMO system generally does not support prices but is designed to stabilize market conditions, which had been chaotic in the 1920s and early 1930s, through monthly, market-based minimum prices that processors must pay for farm milk. FMMO prices are based on current wholesale product prices, which are determined largely by prices established on the CME. FMMOs also provide for sharing farm revenue across producers in certain geographic areas and for balancing marketing power between milk handlers, who reportedly held an advantage prior to FMMO development, and farmers. Current policy is set for DPPSP until 2012 under the 2008 farm bill, and FMMOs are permanently authorized. As Congress, the Administration, and the dairy industry consider how to revise the dairy pricing system, two schools of thought appear to be emerging. One is to reduce price volatility through some means of supply control while raising farm prices. The other is to allow the market to fluctuate and help farmers manage the resulting price risk through hedging strategies used by farmers in other parts of the agriculture sector.

T he manner in which staff are deployed within an organization may reflect the mission and priorities of that organization. In the House of Representatives, 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 work of the House over time. Some of the insights that might be taken from staff levels include an understanding of the division of congressional work between Members 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 House Member, committee, leadership, and other offices since 1977. No House 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 Members, committees, leaders, officers, officials, and other entities) in telephone directories published by the House. Table 1 in the " Data Tables " section below provides data for staff listed in House directories through 2016. Data for House staff listed as joint committee employees on 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 House 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 House are an official source of information about that institution, and are widely available; presumably, the number of directory listings closely approximates the number of staff working for the House; while arguably not their intended purpose, the directories provide a consistent breakdown of House 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 House are listed in the chamber's telephone directories. If some staff are not listed, relying on telephone directories is likely to lead to an undercount of staff. It is not possible to determine if those staff who are listed were actually employed by the House at the time the directories were published. If the directories list individuals who are no longer employed by the House, then relying on them is likely to lead to an overcount of staff. The extent to which the criteria for inclusion in the directories for the House have changed over time cannot be fully determined. Some editions of the House's directories 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 House over time. Some House 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 House, 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. A random sample of House Member offices used to develop an estimate of Member office staff working in Washington, DC, and discussed in greater detail below, may or may not be representative of the entire population of House Member offices. The extent to which the sample is representative of the population from which it is drawn will determine the accuracy of the estimated data for House Member offices. While it is unlikely that a full count would yield significantly different results, it is a possibility. House staff data were developed based on an estimate of staff working in Member offices, and a full count of staff listed in all non-Member congressional offices listed in each House telephone directory. In some years, the House published two directories. When that happened, data were taken from the earlier publication. A full count of House Member office would have exceeded available resources, and unlikely to yield a significantly different result than that which would result from a count of staff working in a random sampling of Members' offices. Since 1975, the House has limited the number of full-time staff working in a Member's office to 18 permanent employees; in 1979 up to four FTEs who may work part time were authorized. As a consequence, among all congressional entities, House Member office staffing is the least likely to show a high degree of variability. For each year, a random sample of 45 Member offices was drawn in proportion to the distribution of Member offices in the Cannon, Longworth, and Rayburn House office buildings in 2014. Staff telephone data from those offices were counted and assumed to be in Washington, DC, if they were listed as working in the Cannon, Longworth, or Rayburn buildings, and outside of Washington, DC, if they were not. The average number of staff working in Washington, DC, and in district offices was computed. Those data were multiplied by the number of Member offices to derive an estimate of the number of staff employed in personal offices who work in House Member offices. Table 2 in the " Data Tables " section below provides the computed averages from the sample data and the estimated House Member staff working in Washington, DC, and district offices. Committee data are based on a full count of all telephone directory listings for House standing, special, and select committees as described in individual directory listings. The data also include associate staff of the Committees on the Budget, Rules, and Ways and Means, and joint committee staff housed in House facilities. In the " Data Tables " section below, four tables provide staff levels in various House committees. Joint committee staff data from the House for panels that met in the 114 th Congress (2015-2016) are available in Table 7 . Data for leadership offices include a full count of staff working for Members in leadership positions. In 2016, these listings included the following: Speaker, Majority Leader, Majority Whip, Chief Deputy Majority Whip, Minority Leader, Minority Whip, Assistant Minority Leader, Senior Chief Deputy Minority Whip, and Democratic and Republican Cloakrooms. Other leadership positions included House Republican Conference, House Republican Policy Committee, House Republican Study Committee, House Democratic Caucus, and House Democratic Steering and Policy Committee. Data for chamber officers and other House officials include a full count of staff working for House officers and officials. In 2016, House officers included the Clerk, Sergeant at Arms, Chief Administrative Officer, and Chaplain. Officials included staff in the offices of Parliamentarian, Interparliamentary Affairs, Law Revision Counsel, Legislative Counsel, General Counsel, Inspector General, Emergency Preparedness and Planning Operations, and House Historian. Commissions data comprise the smallest category of House data, and are based on a full count of those entities. In 2016, commissions data included staff working for the Commission on Congressional Mailing Standards (commonly known as the Franking Commission); the Commission on Security and Cooperation in Europe (typically referred to as the Helsinki Commission); the Congressional-Executive Commission on the People's Republic of China; and the Tom Lantos Human Rights Commission (successor to the Congressional Human Rights Caucus). Between 1977 and 2016, the number of House staff grew from 8,831 to 9,420 or 6.67%. Staffing levels have ranged from a low of 8,831 in 1977 to a peak of 10,004 in 2008. The number of House staff has grown by an average of 15 individuals annually, or 0.22%. Change in House staff has been characterized by slight, but steady growth in two periods (1977-1994, 12.01%; and 1996-2011, 14.89%), separated by a brief period of sharp decline (1994-1996, -12.13%), and ending with another decrease (2011-2016, -5.67%). Figure 1 displays staff levels in five categories since 1977. These categories include staff working in the offices of Members, committees, leadership, officers and officials, and commissions. Figure 3 displays change in the distribution of staff among the categories over the same time period. Table 1 , in the " Data Tables " section below, provides detailed staff levels in those categories. Staff levels in House Member offices have grown from 6,556 in 1977 to 6,880 in 2016, or 4.94%. The level of staffing grew steadily from 1977 until peaking at 7,284 in 1994, and falling 10.74%, to 6,502, in 1995. Member staff increased between 1997 and 2011 in an uneven, but generally upward pattern before reaching its highest level, 7,360, in 2009. Since 2009, Member staff have decreased to 6,880, an 6.52% decline. Figure 2 displays the distribution of House Member staff between Washington, DC, and district offices since 1977, and the average number of staff working in a Member office at various times. From 1977 until 1994, more staff worked in Washington, DC, than in field offices. Throughout that period, however, the number of staff assigned to district offices steadily grew while Washington, DC-based staff declined in an uneven, but generally downward pattern. Since 1994, staff have been relatively evenly distributed between Washington, DC, facilities and district offices. The number of staff working in Members' offices reflects both the relatively modest overall growth of Member staff since 1977, and the changing distribution of staff from Washington, DC, to district office settings. Table 2 in the " Data Tables " section below provides the estimated House Member staff working in Washington, DC, and district offices since 1977. House Member staff comprise approximately three-quarters of all House staff. This proportion of overall staffing has been relatively steady since 1977. Figure 3 provides staff levels and distributions among categories of offices from 1977 to 2016. Committee staff levels have shown the greatest decline among House staff categories, decreasing 31.36% since 1977. Change among House committee staff was characterized by a moderate decline in 1977-1981 (-9.04%), steady growth from 1981 until 1992 (29.83%), a period of sharp decline in 1992-1997 (-42.81%), a period of slow, unsteady growth from 1997 to 2010 (18.09%), and another sharp decline from 2010 to present (13.93%). The 2016 level of 1,298 is 593 (-31.36%) fewer than 1977 levels, and 935 (-41.87%) fewer than the 1992 peak of 2,233 staff. Since 1977, committee staff have comprised a decreasing proportion of House staff, falling from 21.41% of House staff in 1977 to 13.78% in 2016. In the " Data Tables " section below, four tables provide staff levels in various House committees. Table 3 provides House committee 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 available in Table 6 . Totals for each year, which include joint committee staff listed in the House directory found in Table 7 , are presented in Table 1 . The actual number of staff in House leadership offices grew from 62 in 1977 to 239 in 2016, peaking in 2011 at 241. This growth was relatively steady over time. As a proportion of House staff, leadership employees comprised 0.70% in 1977, and 2.54% in 2016. Staff working in the offices of House officers and officials has grown 254.98% since 1977. Staff levels grew steadily from 1977 to 1991, and then showed a one-year drop of 33.15%, from 537 in 1992 to 359 in 1993. In 1994, staff levels returned to a level similar to 1992, and increased again in 1995 to 818, a one-year increase of 57.01%. After dropping to 704 in 1996, levels began a steady increase to a peak of 1,056 in 2008, an increase of 50.00%, before falling 8.90% to 962 by 2016. As a proportion of House staff, officers and officials staff grew from 3.07% in 1977 to 10.21% in 2016. Congressional commission staff levels are essentially flat, and have ranged from a high of 51 in 1977 to a low of 19 in a number of years, most recently in 2001. In 2016, 41 staff worked for congressional commissions. Congressional commissions have consistently comprised less than one-half of one percent of all House staff. Since 1977, the number of staff working for the House has grown, though there has been a decrease in recent years. Overall, there have been increases in the number of staff working in chamber leadership offices, and larger increases in the staffing of chamber officers and officials. Staff have shifted from committee settings to leadership settings or the personal offices of Members. Some of these changes may be indicative of the growth of the House 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 and percentage of staff working in leadership and officers and officials offices, even though that growth has slowed recently. 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 Members has shifted from committee settings to personal office settings. House committee staff has decreased. 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 Members' 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 mission and priorities of that organization. This report provides staffing levels in House Member, committee, leadership, and other offices since 1977. Between 1977 and 2016, the number of House staff grew from 8,831 to 9,420, or 6.67%. Since 2008, however, the number of staff working for the House of Representatives has decreased 5.84%. These changes were characterized in part by increases in the number of staff working in chamber leadership offices, and larger increases in the staffing of chamber officers and officials. House staff working for Members have shifted from committee settings to the personal offices of Members. Some of these changes may be indicative of the growth of the House as an institution. 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; CRS Report R43946, Senate Staff Levels in Member, Committee, Leadership, and Other Offices, 1977-2016; CRS Report R43774, Staff Pay Levels for Selected Positions in Senators' Offices, FY2009-FY2013; CRS Report R43775, Staff Pay Levels for Selected Positions in House Member Offices, 2009-2013; CRS Report R44322, Staff Pay Levels for Selected Positions in House Committees, 2001-2014; CRS Report R44325, Staff Pay Levels for Selected Positions in Senate Committees, FY2001-FY2014.

The cornerstone of income support for unemployed workers is the joint federal-state Unemployment Compensation (UC) program, which may provide income support through UC benefit payments. UC benefits may be extended at the state level if certain economic situations under the Extended Benefit (EB) program within the state exist. The UC program has a direct impact on almost every business in the United States as most businesses are subject to state and federal unemployment taxes. An estimated $7.4 billion in federal unemployment taxes and $36.1 billion in state unemployment taxes were collected in FY2007. In FY2007, the federal appropriation for the UC program was $3.7 billion. In FY2007, states spent an estimated $31.4 billion on UC benefits. Approximately 133.4 million jobs are covered by the UC program. In March 2008, 3.2 million unemployed workers received UC benefits in a given week and the average weekly UC benefit amount was $291. Originally, the intent of the UC program, among other things, was to help counter economic fluctuations such as recessions. This intent is reflected in the current UC program's funding and benefit structure. When the economy grows, UC program revenue rises through increased tax revenues while UC program spending falls as fewer workers are unemployed. The effect of collecting more taxes than are spent dampens demand in the economy. This also creates a surplus of funds or a "cushion" of available funds for the UC program to draw upon during a recession. In a recession, UC tax revenue falls and UC program spending rises as more workers lose their jobs and receive UC benefits. The increased amount of UC payments to unemployed workers dampens the economic effect of earnings losses by injecting additional funds into the economy. Other programs that may provide workers with income support are more specialized. These programs may target special groups of workers; be automatically triggered by certain economic conditions; be temporarily created by Congress with a set expiration date; or target typically ineligible workers through a disaster declaration. Unemployment Compensation is a joint federal-state program financed by federal taxes under the Federal Unemployment Tax Act (FUTA) and by state payroll taxes under the State Unemployment Tax Acts (SUTA). The underlying framework of the UC system is contained in the Social Security Act. Title III of the act authorizes grants to states for the administration of state UC laws, Title IX authorizes the various components of the federal Unemployment Trust Fund (UTF), and Title XII authorizes advances or loans to insolvent state UC programs. The federal government appropriates funds for federal and state UC program administration, the federal share of EB payments, and federal loans to insolvent state UC programs. In FY2008, the appropriation is $3.7 billion. The states will receive an estimated $2.29 billion from the federal government for the administration of their UC programs. The U.S. Department of Labor (DOL) administers the federal portion of the UC system, which operates in each state, the District of Columbia, Puerto Rico, and the Virgin Islands. Federal law sets broad rules that the 53 state programs must follow. These include the broad categories of workers that must be covered by the program, the method for triggering the EB program, the floor on the highest state unemployment tax rate to be imposed on employers (5.4%), and how the states will repay UTF loans. If the states do not follow these rules, their employers may lose a portion of their state unemployment tax credit when their federal unemployment tax is calculated. The federal tax pays for both federal and state administrative costs, the federal share of the EB program, loans to insolvent state UC accounts, and state employment services. The states may only use their state tax revenues for UC benefits and not for administrative costs. States determine UC benefit eligibility, payments, and duration through state laws and program regulations. Generally, UC benefits are based on wages for covered work over a 12-month period. Most state benefit formulas replace half of a claimant's average weekly wage up to a weekly maximum. Weekly maximums in January 2008 ranged from $210 (Mississippi) to $600 (Massachusetts) and, in states that provide dependent's allowances, up to $900 (Massachusetts). In March 2008, the average weekly benefit was $291. Benefits are available for up to 26 weeks (30 weeks in Massachusetts). The average regular UC benefit duration in March 2008 was 15 weeks; the average regular UC benefit duration in FY2007 was 15.2 weeks. In April 2008, approximately 3.0 million unemployed workers received UC benefits in a given week. The Extended Benefit (EB) program, established by P.L. 91-373 (26 U.S.C. 3304), may extend UC benefits at the state level if certain economic situations within the state exist. The EB program is triggered when a state's insured unemployment rate (IUR) or its total unemployment rate (TUR) reaches certain levels. The weekly EB benefit is identical in value to the regular weekly UC benefit. The EB program provides for additional weeks of UC benefits, up to a maximum of 13 weeks during periods of high unemployment and up to a maximum of 20 weeks in certain states with extremely high unemployment. As of July 21, 2008 the EB program is active in Alaska and Rhode Island. On June 30, 2008, the Emergency Unemployment Compensation (EUC08) program was created by P.L. 110-252 . This new temporary unemployment insurance program provides up to 13 additional weeks of unemployment benefits to certain workers who have exhausted their rights to regular unemployment compensation (UC) benefits. The program began July 6, 2008, and will terminate on March 28, 2009. No EUC08 benefit will be paid beyond the week ending July 4, 2009. The EUC08 program should not be confused with the similarly named EB program. The EUC08 program is temporary and applies to all states. The EB program is permanently authorized and applies only to certain states on the basis of state economic conditions specified in law. EUC08 and EB Interactions . The EUC08 program allows states to determine which benefit is paid first. Thus, states may choose to pay EUC08 before EB or vice versa. States balance the decision of which benefit to pay first by examining the potential cost savings to the state with the potential loss of unemployment benefits for unemployed individuals in the state. It may be less costly for the state to choose to pay for the EUC08 benefit first as the EUC08 benefit is 100% federally financed (whereas the EB benefit is 50% state financed). However, if the state opts to pay EUC08 first, individuals in the state might receive less in total unemployment benefits if the EB program triggers off before the individuals exhaust their EUC08 benefits. Alaska has opted to pay EB before EUC08 benefits. In contrast, Rhode Island has opted to pay EUC08 benefits before EB. UC benefits are financed through employer taxes. The federal taxes on employers are under the authority of the Federal Unemployment Tax Act (FUTA), and the state taxes are under the authority given by the State Unemployment Tax Acts (SUTA). These taxes are deposited in the appropriate accounts within the Unemployment Trust Fund (UTF). If a state UC program complies with all federal rules, the net FUTA tax rate for employers is 0.8% on the first $7,000 of each worker's earnings. The 0.8% FUTA tax funds both federal and state administrative costs as well as the federal share of the EB program, loans to insolvent state UC accounts, and state employment services. Federal law defines which jobs a state UC program must cover for the state's employers to avoid paying the maximum FUTA tax rate (6.2%) on the first $7,000 of each employee's annual pay. Federal law requires that a state must cover jobs in firms that pay at least $1,500 in wages during any calendar quarter or employ at least one worker in each of 20 weeks in the current or prior year. The FUTA tax is not paid by government or nonprofit employers, but state programs must cover government workers and all workers in nonprofits that employ at least four workers in each of 20 weeks in the current or prior year. (States are reimbursed for expenditures related to federal workers by the federal government.) An estimated $7.3 billion in FUTA taxes were collected in FY2007. After the payments to the state accounts for administrative expenses, the expected net balance in the UTF of the Employment Security Administration Account, the Extended Unemployment Compensation Account (for the EB program), and the Federal Unemployment Account (for federal loans to the states) was expected to be $35.2 billion at the end of March 2008. Expiring Provision: P.L. 110-140 . On December 19, 2008, the President signed P.L. 110-140 . Among many other items, P.L. 110-140 includes a one-year extension of 0.2% FUTA surtax. At the end of CY2008, the effective FUTA tax on employers for each employee will decrease to 0.6% (down from 0.8%) on the first $7,000 of wages. SUTA taxes are not directly affected by the expiring provision. States levy their own payroll taxes on employers to fund regular UC benefits and the state share of the EB program. These state UC tax rates are "experience-rated," in which employers generating the fewest claimants have the lowest rates. The state unemployment tax rate of an employer is, in most states, based on the amount of UC paid to former employees. Generally, in most states, the more UC benefits paid to its former employees, the higher the tax rate of the employer, up to a maximum established by state law. The experience rating is intended to ensure an equitable distribution of UC program taxes among employers and to encourage a stable workforce. State ceilings on taxable wages in 2008 range from the $7,000 FUTA federal ceiling (eight states) to $32,200 (Idaho). The minimum rates range from 0% (six states) to 1.69% (Rhode Island). The maximum rates range from 5.4% (17 states) to 12.27% (Massachusetts). Approximately $33.7 billion in SUTA taxes were collected in FY2007. State UC revenue is deposited in the U.S. Treasury. These deposits are counted as federal revenue in the budget. State accounts within the UTF are credited for this revenue. The U.S. Treasury reimburses states from the appropriate UTF state accounts for their benefit payments. These payments do not require an annual appropriation, but the reimbursements do count as federal budget outlays. If a state trust fund account becomes insolvent, a state may borrow federal funds. As of this writing, no state has an outstanding loan. The net balance of the state accounts in the UTF at the end of March 2008 was approximately $32.4 billion.

A variety of benefits may be available to unemployed workers to provide them with income support during a spell of unemployment. When eligible workers lose their jobs, the Unemployment Compensation (UC) program may provide income support through the payment of UC benefits. Many workers who have exhausted their rights to regular UC benefits may have their unemployment insurance benefits extended for up to 13 additional weeks through the temporary Emergency Unemployment Compensation (EUC08) program. In addition, the Extended Benefit (EB) program may extend UC benefits at the state level if certain economic situations within the state exist. This report briefly summarizes the UC program, its authorization, appropriations, benefit determination, and funding. For a comprehensive summary of all income support programs available to unemployed workers, consult CRS Report RL33362, Unemployment Insurance: Available Unemployment Benefits and Legislative Activity, by [author name scrubbed] and [author name scrubbed].

Average U.S. gasoline prices have risen sharply during 2004, beginning the year at $1.50 pergallon and peaking at $2.06 in late May. They subsequently declined to $1.87 in August asinventories increased. Among the factors causing 2004's gasoline price volatility has been a shortage of domesticrefining capacity, which has affected gasoline supply availability, creating a need for substantialimports. U.S. gasoline imports -- in the form of conventional gasoline, reformulated gasoline, andgasoline components -- currently make up slightly more than 10% of the nation's supply. Potential policy concerns raised by growing reliance on gasoline imports include theavailability of foreign supplies that meet U.S. specifications, the speed at which incremental foreignsupplies can be provided to meet shifting domestic demand, and the delivered price of importedsupplies. The nation's stressed gasoline supply capacity has attracted recent legislative interest. In the House, the Gasoline Price Reduction Act ( H.R. 4545 ) was brought to thefloor under suspension of the rules (passage requires a two-thirds vote) on June 15, but failed by236-194. The bill was intended to increase gasoline availability by limiting the number of fuel blendsrequired to meet clean air standards and by allowing waivers of fuel blend requirements duringsupply disruptions. This would have made it easier to ship gasoline between markets when neededto balance supply. On June 16, the House passed the United States Refinery Revitalization Act( H.R. 4517 ) by a vote of 239-192. This bill would provide incentives to increaserefinery capacity, focusing on areas with closed refineries or those experiencing layoffs or highunemployment. It would also charge the Department of Energy (DOE) with centralizing the processof obtaining environmental permits for new refinery projects, including additions and upgrades. Gasoline demand in the United States continues to grow. Although gasoline comprises about45% of total U.S. petroleum consumption, its incremental growth during the recent past accountsfor virtually all of the increase in total oil demand. Figure 1 shows the trend in U.S. gasoline consumption during the past decade, during whichdemand rose 20%. Growth has persisted in more recent years, although 2004 may see some late-yearslowdown because of higher prices. Between 1999 and 2003, petroleum consumption increased byhalf a million barrels per day (mbd), rising from 19.5 mbd in 1999 to 20.0 mbd in 2003. During thesame time span, gasoline consumption rose by the same amount as demand grew from 8.4 mbd to8.9 mbd. Figure 1. U.S. Gasoline Demand: 1993 - 2003 Source: Energy Information Administration, Monthly Energy Review, June 2004, Table 3.4. Gasoline use has continued to grow during the first half of 2004, as almost 9.0 mbd ofgasoline was supplied to consumers, an increase of about 1.9% over the previous year's first half.While there is some preliminary evidence that high pump prices may have begun to retard growthin gasoline demand, it is still too soon to evaluate whether this trend has shifted, and how overallpetroleum demand might track for all of 2004. Gasoline is manufactured in U.S. refineries and imported from foreign refiners as well. Figure 2 shows data for total U.S. demand and domestic production. (1) The gap between the two setsof figures is filled by imported product made by foreign refiners. Imported supply consists offinished gasoline -- which meets U.S. specifications and is market-ready -- as well as blendingcomponents. The latter have become an increasingly important part of gasoline supply, since an increasingamount of ethanol-blended gasoline is being consumed in this country. The trend toward ethanolblends may continue because it is the oxygenate used to replace the additive methyl tertiary butylether (MTBE), which has been banned in New York, California, and Connecticut, and is beingphased out in other places. Figure 2. U.S. Gasoline Production & Demand: Jan. 2003 - July 2004 Source: EIA, Weekly Petroleum Status Report, June 30, 2004, Table 10. In one form or another, the nation imports slightly more than 10% of the gasoline itconsumes, the unavoidable outcome of growing motor fuel demand and refining capacity which hasnot kept pace. This supply is necessary to fill the gap between gasoline production and demandshown in Figure 2. Figure 3 shows the imports of gasoline in detail, the total of which is rising in the time-framein this figure. Total imports peaked this summer at about 1.1 mbd; for the first seven months of2004, they averaged 900,000 barrels per day. Imports fit into three general categories: Conventional gasoline, which comprises about half of the gasoline sold in thenation and conforms to the least stringent environmental standards currently in effect. The U.S.environmental standards for this fuel include a prohibition on the use of lead, limits on summertimevolatility, and limits on manganese and sulfur content. Reformulated Gasoline (RFG) is used in major metropolitan areas in 17 statesand the District of Columbia which have significant ozone problems. In April 2004, EPA designatedareas in a total of 32 states and the District as nonattainment areas for a new ozone standard to bephased-in between 2007 and 2021 (2) . RFG has several requirements, including the mandate that itcontain sufficient oxygenates to meet a minimum oxygen requirement of 2% by weight. Theoxygenate often added is either the chemical MTBE (now banned in several states) or ethanol. RFG's peak usage is during summer months, when it comprises about 29% of nationaldemand. Gasoline components are imported with increasing frequency, amounting to50% of imports during 2004. Gasoline is a "cocktail" of hydrocarbons blended at refineries and fuelterminals. Increasingly, cocktail ingredients are available from foreign refiners, and they are beingimported to expand U.S. refinery output. Since finished gasoline is a blended product, refiners cansupplement short capacity by buying foreign components and blending them here in such a way thatU.S. specifications are met. As a result of the Clean Air Act requirements and state mandates, many different types ofgasoline are sold in the United States. In addition to conventional and RFG, there is oxygenated fuel(higher oxygen content than RFG), low volatility conventional gasoline, and a variety of state andlocal blends. These "boutique fuels" include ethanol blends, California Cleaner-Burning Gasoline(also used in Nevada and Arizona) and a number of other local formulations. As noted above, the trend toward ethanol blends may continue because it is the oxygenateused to replace the additive MTBE. Ethanol blends cannot be stored or transported by pipeline,because ethanol and gasoline do not mix well and can separate. The blend must be mixed near thepoint of final consumption. Imported components of the gasoline "cocktail" fit into the increasingly common practiceof local blending for local markets, in that "cocktail" components often come from multiple sourcesand are assembled at terminals and other gasoline distribution points. For refiners, blending gasolinefrom component parts represents a small incremental supply bonus, since they can purchaseopportunistically those components that might be available on world markets, and manufacture theremainder in their own facilities. In total, U.S. refiners do not have the capacity to make all thegasoline sold in this country, but they often do have substantial flexibility -- within overall capacityconstraints -- to make hard-to-import components tailored to U.S. specifications which foreignrefiners cannot easily provide. The trend shown in Figure 2 suggests that U.S. refiners are able to produce during an averagemonth a bit more than 8.0 mbd, while demand is trending just under 9.0 mbd this year. The actualnumbers fluctuate from month to month. Figure 3 shows total gasoline imports averaging about900,000 barrels per day. (3) Imports of finished gasoline and components -- which have averaged, respectively, about 500,000barrels per day and 400,000 barrels per day during the past 12 months -- bridge the gap betweenU.S. refinery production and demand. Without this supplement, there would be a supply shortfall. Figure 3. Make-up of U.S. Gasoline Imports: Jan. 2002 - July 2004 Source: EIA, Weekly Petroleum Status Report, August 2, 2004, Table 9. The increasing use of blending components in building up the gasoline pool is seen in the riseof components as a proportion of nationwide gasoline inventories. Figure 4 shows that total gasolinestocks started 2003 at essentially the same level (212 million barrels) that they were at the end ofAugust 2004 (206 million barrels). But blending components held in inventory rose from 54 millionbarrels, or 26% of inventory, to 72 million barrels, or 35% of total inventory. This is a substantialincrease, and shows refiners' demand for stocks of components to meet the need for locally-mixedethanol blends as well as diverse boutique fuels. Fifteen states have chosen to address clean air issues by calling for localized gasolineformulations for all or part of their states (4) . Many of these requirements are in effect during summer monthswhen concerns about ozone are greatest. The diversity of fuel formulations has raised concerns among stakeholders regarding refiners'ability to provide the diversity of products required in sufficient quantities as well as the producttransport sector's ability to distribute the diverse product slate. In its Staff White Paper on BoutiqueFuels, (5) the EnvironmentalProtection Agency (EPA) contends that the refining and distribution system works well under normaloperating conditions. But the agency notes that when the entire fuel market is stressed, the placeswhere supply shortfalls and volatile prices tend to show up first and be most acute involvegeographically isolated fuel programs. Many state boutique programs are of this nature, and have fewer suppliers and fewertransport options. In situations where there is a transportation failure, a supply shortfall of gasolinecomponents, or some combination of these and possibly other factors, prices can become veryvolatile as small supply glitches impact an isolated local market disproportionately. There appear tohave been few such instances, but some have taken place. The experience in the Chicago metro area during the spring of 2000 is one example of howa confluence of circumstances can play out. As the Chicago metropolitan area transitioned toethanol-blended gasoline in the late spring of 2000, a key pipeline supplying gasoline from the GulfCoast refining area failed. The supply shortfall from traditional refiners -- coupled with the initialdifficulty in making reformulated gasoline blendstock for oxygenate blending in local refineries --combined to create a tight regional supply situation, which saw pump prices nearly double in Mayand June. (6) But by July,supply from other sources and restoration of pipeline flow began to return prices to accustomedlevels. The price spike, while only a few months in duration, was substantial, and is often pointedto as a "worst case" situation of how a convergence of mishaps can lead to a substantial disruptionin a market delineated by boutique fuel requirements. EPA notes that problems of this type to date have been limited in terms of geographical scopeand duration. It appears that the fuel supply system can support the current structure of fuelstandards, absent some set of untoward circumstances. Most stakeholders, EPA contends, (7) are instead concerned with theproliferation of boutique fuels into the future and would like to see limits on new boutique fuelrequirements. Figure 4. U.S. Gasoline Inventory: Jan. 2002 - Aug. 2004 Source: EIA, Weekly Petroleum Status Report, August 25, 2004, Table 3. Currently, one-third of gasoline imports comes from Canada and the U.S. Virgin Islands. Another third comes from Argentina, the Netherlands, Russia, the United Kingdom, and Venezuela;the remainder is imported in smaller quantities from a diversity of nations. Figure 5 illustrates trends in overall gasoline imports, as well as various suppliers' sharesof the imported gasoline market. It also shows how the amounts supplied by each important suppliercan vary from month to month, as well as changes in the overall supply of imports. Canada -- source of much of the nation's hydrocarbon imports -- is the single leading supplierof gasoline on a regular basis. Canada's exports have increased steadily during recent years. And theU.S. Virgin Islands -- location of the very large Hovenessa refinery, jointly owned by Amerada Hessand the Venezuelan national oil company Petroleos de Venezuela (PDVSA) -- is also a consistentsource of supply. But imports from the other major suppliers fluctuate monthly. Even Venezuela hasexperienced difficulties in meeting its historic refinery output levels since an oil workers strike inlate 2002. Venezuelan gasoline exports to the United States have dropped to about 40% of levelsseen prior to 2002's political disruption. Recent efforts to regain U.S. market position by PDVSA(discussed below) could produce a supply benefit, although refinery operations are still recoveringfrom the strike. Figure 5. Average Daily Gasoline Imports by Country of Origin Jan. 2000 - Apr. 2004 Source: EIA, June 2004. In addition to Canada and the Virgin Islands, increased gasoline imports now come from theUnited Kingdom and the Netherlands, where refinery utilization is much lower than in the UnitedStates; many other nations with spare refinery capacity are suppliers as well. A recent enhancement to the supply of imported gasoline has been made by PDVSA, whichhas started shipping the complete cocktail for ethanol blended gasoline (without the ethanol, whichis blended near the point of sale). PDVSA has planned to export 1 million barrels per month of thishigh-priced component, called RBOB, (8) starting with test cargoes in June. Platts Oilgram Price Report (9) noted that 720,000barrelswere exported in July, and the extra barrels in the U.S. market have provided extra competition forcomparable cargoes from Europe, where distances and shipping costs are greater. This illustrates thesignificance of the supply of foreign gasoline components, and how they can impact U.S. gasolineprices. It is likely that high U.S. prices for gasoline and its significant components will continue toattract foreign refiners' attention, perhaps leading them to seek permanent market share. PDVSA-- which also owns U.S. refiner CITGO, affording direct retail market access -- announced that forSeptember it planned to export 12 RBOB cargoes to the United States, including four or five for theNew York-Connecticut ethanol-only blended markets. (10) Another example of what may be taking place in off-shore refined product supply is therevitalization of a large refinery in Aruba that was recently acquired by Valero Energy, anindependent refining company with most of its facilities in the United States. While geographically well-positioned to serve U.S. markets, this facility had an unsuccessfuloperating history. Valero began improving operations quickly and is adding upgrading units so thatgasoline components can be made in increasing quantities from low-quality crudes. The capacity ofthis refinery is 275,000 barrels per day, a figure which suggests that it could -- when it reachescapacity -- contribute significantly to Gulf and East Coast gasoline supplies. Imports from Aruba areso recent that they are not reflected in DOE data (which lag by a few months) on product imports bycountry. Dependence on imports to meet over 10% of national gasoline needs has begun to causeconcern that these imports might contribute to 2004's high prices. While supplies from Canada mayhave similar physical characteristics and prices to the output from U.S. refiners -- and offer speedydelivery -- products from refineries farther afield may not. Factors such as the cost and timelinessof incremental supply, physical reliability, and meeting U.S. product specifications can affect priceand supply at the gas pump. Shipping cost may be an additional issue. Gasoline and many other refined products needto be protected from contamination from other oils. As a result, they must be shipped in cleanvessels. These product carriers are usually much smaller than crude carriers, and -- not benefittingfrom economies of large scale -- have higher unit costs. In addition, the clean tanker market isinfluenced by spot charter rates for vessels, making product shipping costs often higher and morevolatile than crude oil. It is cheaper to ship crude to a local refinery than to transport products anequivalent distance. (11) Imported products cost more than those refined domestically simply by virtue of transportcosts. The higher import costs impact the last units of gasoline supply, providing a price umbrellafor domestic refiners, whose pricing -- like all industrial pricing -- is linked to the cost of the lastincrements of the good involved. As long as gasoline is imported to meet a sizeable imbalancebetween domestic supply and demand, this situation offers a likelihood of prices which are abovethe cost of domestic manufacture. This assumes that new domestic refining capacity to replaceimports could produce U.S.-spec gasoline at costs below those of foreign refiners plus producttransport tariffs to the United States. In addition to price-related considerations, the speed of supply response to price signals fromU.S. gasoline markets seems less than it might be from a refiner located here. It may well be thatdistance mutes price signals related to an increase in demand, for example, and refiners abroad maybe slow to receive the message that U.S. consumers desire more gasoline and are currently payingprices which would justify a foreign refiner's manufacturing of U.S. specification fuel. Even if theforeign refiners' response to U.S. prices were instantaneous, it could take as long as a month -- insome cases more -- for the physical supply to arrive here. Manufacturing fuel for the U.S. market may be another source of delayed response to U.S.market signals. Some of the substances called for in satisfying U.S. fuel needs may not be producedin the ordinary course of refinery runs abroad. And some -- like RBOB -- are difficult for manyrefiners to make, calling for a longer set-up time. Lags in getting foreign supply may have contributed to 2004's price increases. Figure 3 shows low imports during late 2003 and early 2004, which corresponded to a decline in gasolineinventories and consistent price increases seen throughout the first half of 2004. Is dependence on gasoline imports for more than 10% of the nation's gasoline supplyundesirable? In theory, importing gasoline may have few drawbacks. It might make little differenceif this fuel were to be supplied from across the border in Canada. The products supplied might beU.S.-specification conventional gasoline or RFG. What about imports from a refinery operated bya major international oil company in Europe or nearby in the Caribbean? At what point does foreignrefined product dependence become a policy concern? There is no clear answer, but majorconsiderations in evaluating this question include: Availability of supplies meeting U.S. specifications, so that demand can be metwithout the need for waivers that could compromise environmentalprotections. The speed with which incremental supply might be available, givenjust-in-time gasoline inventories, in order to avoid excessive price volatility. The delivered price of foreign supplies, and whether they are above theincremental price of domestic output, such that they ultimately contribute to higherprices. The nation has no apparent defined policy on refined oil product imports, nor is there a policyregarding gasoline prices. There is a general perception among policymakers that price volatility isundesirable, but there is no consensus on what the price level ought to be. Nor is there consensusabout how the government might deal with market volatility. Similarly, there appears to be generalagreement that spot shortages -- run-outs and lines at gas stations -- are to be avoided. But there areno guides for policy actions to remedy such situations should they take place, and it could be thatletting market forces make corrections without government involvement would be the better courseof action. Some policy initiatives in the 108th Congress are embodied in two House bills focusing onthe proliferation of regional gasoline blends and expanding refinery capacity. H.R. 4545 , the Gasoline Price Reduction Act, centered on the proliferation of special, local boutiquegasoline blends. The bill failed to get the required two-thirds House vote for passage undersuspension of the rules. It would have authorized EPA during significant supply disruptions to issuewaivers of state provisions requiring boutique fuels. The boutique fuel requirement is seen aspotentially limiting supply by impeding the movement of fuel between areas; a shortage in one spotmight not be met with extra fuel from a nearby area because of differing requirements. The bill alsoproposed capping the number of boutique fuels at the current level. H.R. 4545 proposed dealing with supply fungibility; but it did not offer remediesthat could have increased the supply of domestically produced gasoline. H.R. 4517 , theRefinery Revitalization Act -- which passed the House, but has not seen Senate action -- is aimedat facilitating increases in capacity by fast-tracking the environmental review and permitting offacilities in a designated Refinery Revitalization Zone. The Secretary of Energy would designate thezones, coordinate environmental reviews, and make final decisions on federal authorizations for newrefineries within the zones. To the extent that those wishing to construct a new refinery -- or expandan existing facility -- have been hindered by environmental regulation, this measure is intended tooffer some assistance. These bills articulate at least some components of a gasoline supply policy, dealing withdomestic supply and indirectly with imports, and with fuel specifications that impact the distributionof supply. Both measures have drawn substantial criticism, however, particularly on environmentalgrounds. For example, with regard to the refining bill, opponents express concern that such ameasure would override state clean air programs. Among its cons, H.R. 4545 raisesconcerns about the overall cost of gasoline, given that many state programs which avoid full-fledgedRFG have been implemented to keep down gasoline costs. The refining proposals attempt to address the 1 mbd gasoline production shortfall, which ismade up by imports in one form or another. Encouraging growth in domestic refinery capacityimplies a judgment that it is advantageous to have that capacity in the United States, in contrast tooffshore, even if offshore is relatively nearby. As noted above, domestic production could reducetransportation costs and provide quicker supply response to unanticipated changes in demand. Thiscould shorten the duration of a potentially disruptive price spike resulting from a gasoline supplyshortfall. Refinery proposals under current debate do not address other issues impacting refineryprojects, such as an historic lack of profitability in this industry segment (12) . It may well be that thecurrent refining situation -- with imports holding a "price umbrella" over domestic gasolineproduction -- may be a profitable situation for many refiners, many of whom are realizing recordearnings in the first and second quarters of 2004. While this year's earnings may be high, one year'sexperience does not outweigh years of low profits. While a basic change in refiner profitability mightbe suggested, it is too soon for many firms to consider making significant investments in long-livedcapital equipment, whose cost is recouped over many years. Were the prospects for long-term profitability in the refining industry to improve by virtueof a sustainable recovery in refining margins, it is likely that additional investment in added capacitywould be seen. But it might take several years of high margins before firm managers and theirbankers would become confident enough to make substantial capital commitments.

Gasoline demand in the United States has grown consistently during the past decade,increasing by a total of 20%. Between 1999 and 2003, gasoline consumption grew by 500,000barrels per day, accounting for all of the increase in petroleum consumption during that period. While 2004 may see growth slow down because of high prices, during the first seven months of theyear gasoline demand was up by another 1.9%. The fact that gasoline supply has not kept up with demand has been reflected in pump pricesthat have risen from $1.50 at the start of 2004 to as high as $2.06 per gallon in late May. Whensupply and demand become out of sync with their previous relationship, prices change to establisha new balance. The outcome has been a period of volatile gasoline prices, which have set recordhighs that have become a focal point for consumers and policy makers, and raised concerns abouttheir impact on the economy. Gasoline is supplied both by U.S. and foreign refiners. Domestic producers' capacity islimited. As a result, nearly 1 million barrels per day of gasoline and its components are imported.Imported blending components -- especially those used in ethanol-blended fuel -- are increasinglyimportant to total U.S. supply. Without this supplemental supply, gasoline would be less availableand prices likely higher. Imports most recently have come from Canada and the U.S. Virgin Islands, which supplyone-third of the off-shore supply. Argentina, the Netherlands, Russia, the United Kingdom, andVenezuela provide another third. Imports peaked in March 2004, took a dip, and reached new highsin July. Increased imports may have contributed to pump prices backing off their May highs in latesummer. New gasoline blending components from Venezuela and the rehabilitation of a refinery inAruba may also contribute to enhanced gasoline component supply later this year. Gasolinecomponent availability -- which has increased during 2004 -- gives domestic refiners an addedmeasure of flexibility in using their capacity, and contributes to enhanced supplies of fuels neededto meet demand for ethanol-based gasoline and other specialized regional blends. Potential policy concerns raised by growing reliance on gasoline imports include theavailability of foreign supplies that meet U.S. specifications, whether incremental foreign suppliescan be provided quickly enough to meet shifting demand, and the delivered price of importedgasoline. Two legislative efforts were debated in the House regarding gasoline supply issues during2004. One, H.R. 4517 , has passed the House but not been taken up in the Senate. Itwould provide for easier permitting for refinery capacity expansion. And H.R. 4545 ,which did not pass the House, would have limited the growth of special regional fuel blends, oftencalled "boutique fuels." This report will be updated as events warrant.

Local and regional procurement (LRP) of food aid refers to the purchase of commodities for emergency food aid by donors in countries with food needs or in another country within the region. LRP is used extensively by the United Nations World Food Program (WFP) and has been proposed as a cost-effective, time-saving tool that the United States could use to meet emergency food needs. Food aid budget submissions in FY2006 through FY2009 included a proposal with suggested legislative language to authorize the Administrator of the U.S. Agency for International Development (USAID) to allocate up to 25% of the funds available for U.S. food aid (Title II of P.L. 480, or the Food for Peace Act) to local or regional purchase. The budget justification for this authority was that it would increase the timeliness and effectiveness of the U.S. response to overseas food aid needs by eliminating the need to transport the commodities by ocean carriers. Further, savings achieved in transportation and distribution costs could be made available for additional commodity purchases, thereby increasing the overall level of the U.S. response. House and Senate agriculture appropriators did not include this proposal in the annual funding bills. Congressional and other critics of the local purchase proposal maintain that allowing non-U.S. commodities to be purchased would result in undermining the coalition of commodity producers, agribusinesses, private voluntary organizations (PVOs), and shippers that participate in the food aid program and in reducing U.S. food aid. The previous Administration's 2008 farm bill proposal for food aid also called for authorizing the use of P.L. 480 Title II funds for LRP. This proposal also was not adopted. Instead, the 2008 farm bill ( P.L. 110-246 ) included a pilot project for LRP (discussed below). The fiscal 2010 budget proposal for P.L. 480 Title II does not mention using Title II funding for LRP. However, the President's FY2010 foreign affairs budget proposed, among other food-security-related items, that $300 million of International Disaster Assistance (IDA) funds be used for LRP, cash transfers, and cash vouchers to meet emergency food needs. Some of the issues that have been raised about LRP include the following: Could the United States respond to emergency food needs at lower cost and in a more timely manner if commodities were purchased in locations closer to where they were needed? Are there risks that could be associated with LRP that would make it a less-effective response to emergency food needs than provision of U.S. commodities? Could LRP contribute to agricultural development (increased production, productivity, development of markets) of low-income farmers in developing countries? Could LRP adversely affect agricultural development and make poor consumers more food insecure? Almost all U.S. food aid is provided in the form of U.S. commodity donations. P.L. 480, most recently amended by the 2008 farm bill and renamed the Food for Peace Act, authorizes the President, in Title II, to use U.S. agricultural commodities to meet emergency food needs and to provide nonemergency assistance. This statutory authority precludes the use of Title II funds for local and regional purchase in developing countries. In FY2008, the United States provided approximately $2.9 billion of U.S.-produced food aid to the WFP and to PVOs for emergency and non-emergency programs. Most recent analyses of U.S. commodity food aid acknowledge that U.S. commodities purchased and shipped from the United States as food aid have "assisted millions of hungry people over the past fifty years." At the same time critics of U.S. food aid policy argue that food aid could be provided more cost-effectively and in a more timely manner with LRP. The United States has used LRP to a limited extent. Section 491 of the Foreign Assistance Act authorizes the provision of international disaster assistance (IDA). Most IDA funds have been used to supply non-food emergency assistance (tents, blankets, latrines, medicines, and the like), but some have been used for LRP of food. This statutory authority has been used by the U.S. Agency for International Development (USAID) to provide funds to WFP and to PVOs for the local and regional purchase of emergency food aid. The Government Accountability Office (GAO) reports that, since 2000, IDA funds were tapped for about $200 million worth of locally or regionally procured emergency food aid. USAID's Office of Disaster Assistance (OFDA) and the State Department's Bureau for Population, Refugees and Migration use IDA funding to provide emergency food aid. The President's Emergency Plan for AIDS Relief (PEPFAR) also has legislative authority to provide locally or regionally purchased foods to people living with HIV/AIDS. While the United States is the world's largest food aid provider, other food aid donors, including the European Union (EU) and EU member countries, Canada, and Australia, among others, also provide food aid. The United States has continued to provide its food aid in the form of commodities, while other donors have moved to cash-based systems of providing food aid. The EU, the world's second-largest supplier of food aid, supplies almost all of its food aid in the form of cash. Most EU cash for food aid is allocated to the WFP. Individual EU member countries retain relatively small percentages of domestically procured food aid, but most of them also provide most of their food aid to the WFP (also some to PVOs) in the form of cash grants. In contrast to the United States, which has provided about a third of its commodity food aid for nonemergency or development projects, the EU has ceased to provide commodities to support development projects. Instead, the EU provides food security aid in the form of cash financing of food security projects. Canada, which is an important bilateral donor of food aid, provides all of its aid on a cash basis. Most of its cash contributions go to the WFP, but Canadian PVOs get some as well. The WFP and PVOs have been using donor funding to procure commodities in developing countries for more than 30 years. The WFP has had extensive experience with LRP. WFP's procurement policy is "to procure food in a manner that is cost-effective, timely and appropriate to beneficiary needs, encouraging procurement from developing countries to the extent possible." In 2008, WFP purchased more than $1 billion worth of commodities (2.1 million metric tons) worldwide, more than half of which were purchased in developing countries. WFP also depends heavily on U.S. commodity donations. In 2008, the United States donated $2.1 billion in U.S. commodities to the emergency operations of WFP. While WFP's procurements are generally large scale, the PVO's LRP activities are smaller in scale. One PVO, Catholic Relief Services (CRS), has provided some information about its LRP activities. CRS carried out LRP purchases during 2000-2008 in 20 developing countries. CRS purchased over $9.8 million worth of commodities (22,400 metric tons) in over 114 transactions. Purchases by CRS were financed with funds from private donations, the President's Emergency Fund for Aids Relief (PEPFAR), the Office of Foreign Disaster Assistance (OFDA), the McGovern-Dole International Food for Education and Child Nutrition Program, the Millennium Challenge Corporation, the Governments of Ireland and Germany, the World Bank, the Church of Jesus Christ of Latter Day Saints, and other PVOs, such as Caritas and Concern Universal. Evaluations of LRP have focused on the cost-effectiveness of LRP versus U.S. commodity donations and the timeliness of delivery of LRP versus overseas donations. The impact of LRP on development has been much less researched. Three recent reports--by the Government Accountability Office (GAO), Michigan State University (MSU), and the Organization for Economic Cooperation and Development (OECD)--examine issues with respect to LRP. The GAO report found that, for the most part, LRP was more cost-effective and arrived more quickly than U.S. in-kind donations. According to GAO, about 95% of WFP's local procurement in Sub-Saharan Africa cost about 34% less than the cost of similar food aid that USAID purchased and shipped from the United States to the same countries between 2001 and 2008. For Latin America, however, GAO found that the cost of LRP was comparable to the cost of U.S. in-kind food aid. GAO also found that delivery of WFP locally procured commodities was more timely than for U.S. in-kind donations. For example, in the case of Sub-Saharan Africa, delivery time for U.S. food aid was 147 days compared to 35 and 41 days, respectively, for locally and regionally procured food. Prepositioning of U.S. in-kind food aid in overseas locations, which the United States does to a limited extent, can also reduce delivery time. The MSU report found that there were cost savings when LRP was used instead of in-kind food aid. Using LRP rather than in-kind donations of maize (corn) in three Sub-Saharan African countries (Kenya, Uganda, and Zambia) over a five-year period saved nearly $68 million and allowed 75% more food aid to be provided to beneficiaries, according to the MSU report. The OECD study found that the cost savings of LRP relative to in-kind food aid are greatest for the two main commodities shipped to Sub-Saharan Africa (maize and corn/soy blend). The cost of locally procured maize and corn/soy blend (CSB) was 61% and 52%, respectively, that of in-kind food aid. Overall, the OECD study determined that the cost of in-kind food aid averaged 50% more than local food procurement and 33% more than regional food aid procurement. GAO identified factors that limit the efficiency of LRP. These include a lack of reliable suppliers, poor infrastructure and logistical capacity, weak legal systems, timing and restrictions on donor funding, and quality considerations. According to GAO, WFP has encountered problems in identifying reliable suppliers of food aid commodities; limited infrastructure (ports and transport) can delay delivery; weak legal systems could limit buyers' ability to enforce contracts and impose penalties; and late or inadequate donor funding can limit the ability of WFP to purchase food when and where needed. Some of these factors would apply as well to in-kind food aid donations. GAO also notes that food quality could be a problem and provided some examples. According to GAO, however, WFP has not analyzed whether quality issues are more severe for food procured locally or regionally versus food procured internationally. GAO also notes that LRP has potential for adversely affecting markets. This would be the case when LRP increases demand for food and drives up prices for consumers. Examples from 2003 are price hikes that occurred in Ethiopia and Uganda when WFP purchased local commodities for food aid. The antidote to adverse market impacts, GAO says, is improved intelligence on market prices, production levels and trade patterns. The MSU report also notes that any food aid operation entails risks. Risks associated with in-kind food aid are that it may reduce production and trade incentives and create dependency in receiving countries. For LRP, the MSU report distinguishes between first-order risks, which can be defined with precision and are relevant to managers of food aid transactions, and second-order risks, which are less precisely defined, are not specific to a particular transaction, and have consequences that are likely to be less serious or less easily established than those of first-order risks. The MSU report lists first-order risks as (1) LRP will push local prices above import parity or historical levels, (2) traders will default on tenders, and (3) locally or regionally procured food will fail to meet minimum safety standards. According to MSU, its analysis of WFP's LRP activities in Africa suggests that WFP has effectively managed default and food safety risks though pre-qualification of traders and by using contract conditions that penalize traders for default. In its study, published in 2006, unlike the 2009 GAO report, MSU found no instances of food safety breaches in WFP's procured food. MSU reports some evidence that LRP may have contributed to price surges in Uganda in 2003 and in Niger and Ethiopia in 2005/2006. This kind of market risk, MSU says, deserves more analysis. For second-order risks, MSU notes that these relate to medium- to long-term developmental effects of LRP, such as creating price instability or an unsustainable market, or artificially strengthening some traders at the expense of others. MSU's conclusion is that second-order risks can be effectively managed through careful selection of traders, competitive tenders, and proper contract specification. However, second-order risks will increase with the share of LRP in the market. With larger market shares for LRP, tendering and contracting procedures must be especially well designed and executed, according to the MSU report. The OECD study deals only with the cost-effectiveness of LRP. It does not address risks identified and discussed in the GAO and MSU reports. However, the OECD study points out that, based on its food aid study, "in most circumstances, financial aid rather than food aid in-kind is the preferable option.... (but) In many food deficit situations, local procurement is not always a feasible option.... [c]ontext-specific rationale is always required for relying on food aid in kind in preference to financial aid." GAO identifies U.S. cargo preference requirements as a possible constraint to U.S. implementation of LRP activities. Cargo preference legislation requires that up to 75% of the gross tonnage of agricultural foreign assistance cargo be transported on U.S. flag vessels. Cargo preference is strongly supported by the U.S. maritime industry and the Maritime Administration as needed to maintain and encourage a privately owned and operated U.S.-flag merchant marine that provides a ship base needed in wartime or other national emergencies and a cadre of skilled seafarers available in time of national emergencies. Various GAO reports have found that cargo preference can add to the cost of shipping U.S. food aid and that it may not be effective in meeting its aims with respect to the U.S. merchant marine. According to GAO's LRP study, there are differences of opinion about the extent of applicability of cargo preference requirements to LRP activities that might be funded by the U.S. government. According to GAO, cargo preference requirements could adversely affect potential cost savings and timeliness of food aid deliveries of LRP if locally or regionally procured commodities had to be shipped on U.S. flag vessels. GAO recommends that the agencies involved in implementing cargo preference--the Department of Transportation, USDA, and USAID--address the cargo preference issue through a renegotiation of the 1985 memorandum of understanding that delineates agency responsibility for implementing cargo preference requirements. The potential to involve smallholders and low-income producers in developing countries in LRP has not been extensively explored in the reports examined in this report (GAO, MSU, OECD). Those reports focused primarily on issues relating to the cost-effectiveness of LRP and the timeliness of deliveries. However, USAID LRP initiatives and the WFP's Purchase for Progress program have begun explorations of how low-income farmers in developing countries could participate in LRP efforts carried out by WFP or USAID. (USAID and P4P programs are discussed in the next section.) The 2008 farm bill ( P.L. 110-246 ) authorized the Secretary of Agriculture to implement a five-year local and regional food aid procurement pilot project in developing countries from FY2009 through FY2012 (Section 3206 of P.L. 110-246 , 7 U.S.C. 1726c). Funding of $60 million from the Commodity Credit Corporation (CCC) is being made available to carry out the program during FY2009-FY2012. The main objective of the USDA pilot program is to use LRP to quickly help meet food needs due to food crises and disasters. The first phase of the pilot was completed with a study of prior local and regional procurement. Subsequent phases of the project are to develop guidelines (FY2009), implement field-based projects (FY2009-FY2011), and conduct an independent evaluation (FY2011). All of the pilot program projects are to be completed by the end of FY2011, at which point USDA will contract for an independent evaluation. USDA published Interim Guidelines for the Local and Regional Food Aid Procurement Pilot Project in September 2009. The public comment period for the preliminary guidelines ended October 19, 2009. Information sessions for interested participants in the field-based pilot programs were held in October. The next step in implementing the LRP pilot program will be to publish a final version of guidelines and announce requests for proposals for field-based LRP projects. Separate from USDA's pilot LRP program, the FY2008 Supplemental Appropriations Act ( P.L. 110-252 ) provided USAID with $125 million--$75 million of international disaster assistance (IDA) and $50 million of development assistance (DA)--to implement LRP in developing countries. The funds will be available until expended. Disaster assistance funds are being devoted to meeting emergency food needs, while DA funds are being devoted to meeting urgent food security needs and strengthening staple food markets to support local and regional procurement. Disaster assistance-funded LRP will be evaluated in terms of general procurement information, timelines, impact on procurement market, and beneficiaries. DA-funded LRP will be evaluated as to how farmer organizations are enabled to participate in LRP; whether costs of moving goods from farm to market are reduced; how financial markets serve staple food value-chains; how commodity exchanges are strengthened; and how warehousing, communications, and finance systems are improved. The FY2010 Foreign Operations appropriations measure ( P.L. 111-117 ) calls for USAID to report on its implementation of LRP by September 2010. In 2008, WFP established its Purchase for Progress program (P4P). The P4P program aims to build on WFP's extensive experience with worldwide local and regional procurement to enable smallholders and low-income farmers in developing countries to supply food to WFP's global operations. While WFP's global LRP procurement activities stress cost saving and timeliness of delivery, the P4P program explicitly aims at enabling small farmers to be competitive players in the agricultural marketplace. P4P links farmers to WFP procurement operations and at the same time helps farmers to connect to other local and regional markets. The main approach is to purchase food aid commodities directly from farmers' associations using forward contracting and ensuring farmers get a fair payment for their produce. According to WFP, P4P will create incentives for farmers to develop their crop management skills; create an incentive for farmers to produce quality foods; create a market for the surplus crops of smallholders and low-income farmers; promote local processing of foods; and realign the way WFP buys food to better address the root causes of hunger. P4P is a five-year program with pilot projects in 21 countries. In the first year of activity (2008), P4P bought 40,000 metric tons of food. Over the five years of the program, 350,000 farmers are expected to benefit. The funding total is $76 million. Major funding sources are the Bill and Melinda Gates Foundation and the Howard Buffett Foundation. The United States has contributed $20 million to WFP for the P4P program. The P4P Technical Review Panel met at WFP headquarters in Rome in December 2009 to discuss challenges and implementation mechanisms from work done in 21 P4P countries during the first year. Among implementation challenges identified were defining commodity prices paid to smallholders in cases of forward contracting (where WFP commits to procure a certain amount of commodities at planting time). The challenge of forward contracting is to ensure a fair price without distorting or disrupting markets. Other implementation challenges discussed were risk mitigation mechanisms to prevent contract defaults and ensure that quality standards are met and ways to ensure that female farmers also benefit from the P4P project. Further work of the Technical Review Panel will be on measuring impacts of P4P on smallholder farmers, involvement of traders in P4P, and the replication of successful P4P experiences in ongoing local and regional procurement efforts undertaken by WFP. In the 111 th Congress, LRP was dealt with in appropriations bills and in proposed authorizing legislation in both the House and Senate. Bills under consideration would give the U.S. government the flexibility to use LRP in response to food emergencies without reducing the funds available for P.L. 480 Title II commodity donations. The President's FY2010 foreign affairs budget called for $300 million to be allocated to USAID's International Disaster Assistance (IDA) program to be used for LRP and the financing of cash transfers and cash vouchers to meet food security objectives. The House-passed Foreign Operations appropriations bill ( H.R. 3081 ) provided $200 million of IDA funding for these purposes. The Senate committee-reported bill ( S. 1434 ) directed that $1.5 billion of USAID development assistance be allocated to agricultural development and food security efforts, "including for local and regional purchase and distribution of food." The final Foreign Operations appropriations bill, folded into a consolidated measure ( H.R. 3288 , P.L. 111-117 ) discussed local and regional purchase of food aid commodities under the heading of International Disaster Assistance. The conference report ( H.Rept. 111-366 ) stipulates that "a significant portion of the funds available under this heading ($845 million) will support food assistance in fiscal 2010 and will be in addition to the $1.169 billion designated in this Act for food security and agricultural development." In separate House and Senate-passed agriculture appropriations bills ( H.R. 2997 ), funds for P.L. 480 Title II commodity donations increase from $1.2 billion in FY2009 to $1.7 billion in FY2010. S. 384 , the Global Food Security Act of 2009 (Lugar), was introduced in the Senate on February 5, 2009, and reported by the Senate Foreign Relations Committee on May 13, 2009 ( S.Rept. 111-19 ). H.R. 3077 (McCollum), the House companion bill to S. 384 , was introduced on June 26, 2009. Among other provisions, S. 384 and H.R. 3077 would authorize the President to provide assistance for unexpected urgent food needs and establish a Rapid Response to Food Crises Fund to carry out such a program. The proposed Food Crisis Fund is in addition, and complementary, to food aid provided under 2008 farm bill legislative authorities. The Rapid Response Fund would allow USAID to quickly engage at the onset of a crisis with the objective of preempting its escalation. The fund can be used for food and non-food assistance of an emergency nature; it is not for long-term support or development. Funds may be used for the local and regional purchase and distribution of food. Other food-security-related assistance, in the form of vouchers, cash transfers, safety net programs, or other appropriate assistance of an emergency nature, may also be provided. S. 384 and H.R. 3077 would authorize $500 million for the Emergency Rapid Response to Food Crises Fund that would remain available until expended. Disbursements from the account must be reported to the appropriate congressional committees not later than five days prior to providing the assistance. H.R. 2817 , introduced on June 11, 2009, includes an endorsement of a coordinated approach to addressing food security concerns--the Roadmap to End Global Hunger--that was developed by a group of 42 U.S. PVOs. The Roadmap proposal calls for allocating more than $50 billion to global food security initiatives over a five-year period. Included in the Roadmap proposals is an allocation of $7.4 billion for local and regional purchase of food aid commodities and other food security-related activities. In addition, the Roadmap proposal calls for $9.8 billion in food commodity donations over five years through P.L. 480 Title II.

Using federally appropriated funds to procure commodities for international food aid in countries with emergency needs or in nearby countries is a controversial issue. In budget submissions for FY2006-FY2009, the Bush Administration proposed allocating up to 25% of the funds available for U.S. food aid (Title II of P.L. 480, or the Food for Peace Act) to local or regional procurement (LRP) of food aid commodities. Each time Congress rejected the proposal. The Administration argued that LRP would increase the timeliness and effectiveness of the U.S. response to overseas food emergencies by eliminating the need to transport commodities by ocean carriers. Congressional and other critics of the local procurement proposal maintain that allowing non-U.S. commodities to be purchased would undermine the coalition of commodity groups, agribusinesses, private voluntary organizations, and shippers that participate in and support the U.S. food aid program and would reduce the volume of U.S. commodities provided as aid. The United States is alone in providing practically all of its international food aid in the form of its own commodities. U.S. food aid legislation precludes the provision of any but U.S. commodities to meet international food aid needs. The Foreign Assistance Act (P.L. 87-195), however, permits the use of some U.S. funds for LRP as part of the U.S. response to international disasters. The European Union provides almost all of its food aid via the United Nations World Food Program (WFP) in the form of cash; Canada's food aid also is cash-based. The WFP has been using donor funding to procure commodities locally or regionally in developing countries for more than 30 years. Several recent studies have evaluated the timeliness and cost-effectiveness of LRP versus commodity donations and conclude that LRP in Sub-Saharan Africa (SSA) costs substantially less than shipping food aid from the United States to Africa and that food aid delivery times are substantially shorter. The studies point to risks associated with LRP, including lack of reliable suppliers, poor infrastructure, weak legal systems, donor funding delays, and quality (i.e., food safety or nutrition) considerations, that could impede the efficiency of LRP. On the other hand, the studies suggest that risks associated with LRP are no greater than risks associated with in-kind donations and that they could likely be countered with better market intelligence and effective management of LRP activities. One study suggests that in many food deficit situations, LRP may not be a feasible option. Inadequate local supplies or adverse market effects on producers or consumers in a country or region could rule out using LRP. The U.S. Department of Agriculture has begun implementation of the pilot LRP program established in the 2008 farm bill (P.L. 110-246). Separately, the U.S. Agency for International Development is implementing LRP activities with funds appropriated in an FY2008 supplemental appropriations act (P.L. 110-252). In addition, the WFP has initiated a Purchase for Progress (P4P) program that will evaluate how small farmers in developing countries can participate in WFP procurement. The FY2010 Foreign Operations appropriation (P.L. 111-117) includes funds in international disaster assistance appropriations that could be used to fund LRP and food-security-related activities such as cash vouchers or cash transfers for purchasing food. In addition, P.L. 111-117 directs that $1.17 billion of development assistance be allocated to agricultural development and food security efforts. Proposed legislation, S. 384 and H.R. 3077, would authorize a $500 million appropriation, separate from P.L. 480 food aid, for responding rapidly to emergency food needs, including with LRP. The FY2010 Agriculture appropriations bill (P.L. 111-80) provides $1.7 billion to finance provision of U.S. commodities under P.L. 480.

As required by the Social Security Act, a Medicare Board of Trustees oversees the financial operations of the two Medicare trust funds: the Hospital Insurance (HI) Trust Fund and the Supplementary Medical Insurance (SMI) Trust Fund. The HI Trust Fund covers Medicare Part A services, including hospital, home health, skilled nursing facility, and hospice care; the SMI Trust Fund covers Medicare Parts B and D, including physician and outpatient hospital services and outpatient prescription drugs. The two trust funds are statutorily separate, with all HI and SMI benefit expenditures paid out of their respective trust funds. The Medicare trustees are required to report annually to Congress on the financial and actuarial status of the funds. The primary source of financing for the HI Trust Fund is the payroll tax on covered earnings of current workers. Employers and employees each pay 1.45% of wages, and unlike the Social Security tax, there is no annual maximum limit on taxable earnings. Workers with annual wages over $200,000 for single tax filers or $250,000 for joint filers pay an additional 0.9%. Other sources of revenue for the HI Trust Fund include interest paid on the U.S. Treasury securities held in the HI Trust Fund, a portion of the federal income taxes that individuals pay on their Social Security benefits, and premiums paid by individuals who would otherwise not qualify for Medicare Part A. The SMI Trust Fund has different revenue sources. There are no payroll taxes collected for this fund, and enrollment in Medicare Parts B and D is voluntary. Individuals enrolled in Parts B and D must pay premiums, which cover about 25% of program costs. The other 75% of revenues for the SMI Trust Fund primarily comes from general revenue transfers. Other sources of revenue include interest paid on the U.S. Treasury securities held in the fund and Part D state transfers for Medicare beneficiaries who are also eligible for Medicaid (dual-eligibles). The 2018 report of the Medicare Board of Trustees estimates that by 2026, HI revenues and assets will no longer be sufficient to fully cover Part A costs and the fund will become insolvent. Because of the way it is financed, the SMI fund cannot face insolvency; however, the Medicare trustees project that SMI expenditures will continue to grow rapidly and thus place increasing strains on the federal budget. Because of concerns over the potential for growth in general revenue spending for Medicare over time, the Medicare Prescription Drug, Improvement, and Modernization Act of 2003 (MMA; P.L. 108-173 ) created a Medicare trigger that requires certain actions to be taken should general revenue funding be expected to exceed a certain proportion of total Medicare outlays within a certain number of years. Specifically, Section 801 of the MMA requires the Medicare trustees, beginning with their 2005 report, to examine and make a determination each year of whether general revenue funding is expected to exceed 45% of Medicare outlays for the current fiscal year or any of the following six fiscal years. An affirmative determination in two consecutive annual reports is considered to be a Medicare funding warning in the year in which the second report is made. If such a warning is issued, the MMA (Sections 802-804) specifies certain requirements and procedures for the President and Congress to follow related to the introduction and consideration of legislation designed to respond to the warning. There is, however, no requirement that legislation must be enacted and no automatic mechanism in place to sequester money. It is also important to note that either chamber may alter these procedures should a numerical majority choose to do so. Section 801 of the MMA defines the key measures and terms used in determining a Medicare funding warning. Excess general revenue Medicare funding occurs when general revenue Medicare funding divided by total Medicare outlays exceeds 45%. General revenue Medicare funding is defined as total Medicare outlays minus dedicated financing sources . Total Medicare outlays include total outlays from the HI and SMI Trust Funds. The law specifies that payments made to plans under Part C (Medicare Advantage, MA) for rebates, and administrative expenditures for carrying out Medicare, are to be included in the total. Fraud and abuse collections that are applied or deposited into a Medicare trust fund are to be deducted from the total. Dedicated revenue sources include the following: (1) HI payroll taxes; (2) amounts transferred to the Medicare trust funds from the Railroad Retirement pension fund; (3) income from taxation of certain Social Security benefits which is credited to the HI Trust Fund; (4) state transfers for the state share of amounts paid to the federal government for dual-eligible beneficiaries enrolled in Part D; (5) Medicare premiums paid under Parts A (HI), B (SMI) and D (SMI) of Medicare--including any amounts paid as a result of late enrollment penalties (without taking into account reductions in premiums as a result of rebates received by beneficiaries enrolled in MA plans); and (6) any gifts received by the trust funds. Interest earned on the trust fund is excluded from dedicated sources. A Medicare funding warning is triggered when two consecutive Medicare trustees' reports contain projections that general revenue Medicare funding will exceed 45% of total Medicare outlays at some point during the next seven years (this includes the current and six subsequent fiscal years). The Medicare trustees first made a determination of excess general revenue Medicare funding in their 2006 report and did so in each report through 2013. As two consecutive such determinations trigger a funding warning, funding warnings were issued each year from 2007 through 2013. The 2013 report was the eighth consecutive time that the threshold was estimated to be exceeded within the first seven years of the projection, and it was the seventh time that a Medicare funding warning was triggered. However, the Medicare Trustees Reports issued in 2014, 2015, and 2016, projected that Medicare general revenue funding would not exceed 45% of total Medicare outlays within the next seven years. Therefore, the Medicare trustees did not issue determinations of excess general revenues and funding warnings were not triggered in those years. No response was required of the President or Congress in 2015, 2016, 2017, or 2018. Specifically, in their 2014 and 2015 reports, the Medicare trustees projected that the expected higher tax income and lower outlays due to provisions in the Patient Protection and Affordable Care Act (ACA; P.L. 111-148 ) and other legislation would result in general revenue funding remaining below the 45% threshold over the next seven years. For similar reasons, as well as a recent slowing in Medicare spending, the Medicare trustees estimated in their 2016 report that general revenue funding would remain below the 45% threshold through FY2022. In their 2017 report, however, the Medicare trustees projected that general revenues would exceed the 45% threshold in FY2023, within the seven-year projection window. Therefore, the trustees issued a determination of excess general revenue Medicare funding. Similarly, in their 2018 report, the trustees estimated that general revenues would exceed the 45% threshold in FY2022 (at the end of CY2021), also within the seven-year projection window, and thus issued a determination of excess general revenue Medicare funding (see Figure 1 ). Because such a determination was made in two consecutive years, a funding warning has been triggered and a legislative response by the President will be required subsequent to the release of his FY2020 budget (in 2019). The Medicare trustees project that by the end of CY2021, the ratio of dedicated funding to outlays will exceed 45%, grow to almost 54% by 2042, and decline to about 51% by the end of the 75-year projection period, in 2092. In years in which the Medicare trustees issue a Medicare funding warning, the President is required to submit to Congress proposed legislation that "respond[s] to such warning." Although the precise contents of the proposal remain within the President's discretion, Section 802 of the MMA requires that the proposal be submitted within 15 days of submitting a budget for the succeeding year. The requirement that the President submit proposed legislation in response to a funding warning does not apply, however, if, "during the year in which the warning is made," Congress enacts legislation to eliminate excess general revenue Medicare funding for the seven-fiscal year reporting period, as certified by the Medicare trustees within 30 days of the legislation's enactment. The executive branch has generally taken the position that, under the Constitution's Recommendation Clause, Congress cannot compel the President, or executive branch officials, to submit legislative proposals directly to Congress. These objections have been registered in numerous presidential signing statements and Department of Justice, Office of Legal Counsel opinions, and have repeatedly been asserted in litigation. For example, upon signing the MMA on December 8, 2003, President George W. Bush issued a signing statement registering his constitutional objections to Section 802's requirement that the President submit proposed legislation to Congress in response to a Medicare funding warning. Specifically, President Bush noted that his Administration would construe Section 802 "in a manner consistent with the President's constitutional authority to supervise the unitary executive branch and to recommend for the consideration of the Congress such measures as the President judges necessary and expedient." Similarly, the Obama Administration considered "the requirement to submit legislation in response to the Medicare funding warning to be advisory and not binding, in accordance with the Recommendations Clause of the Constitution." Notwithstanding his objections to Section 802, President Bush submitted legislation in 2008 responding to the Medicare trustees' 2007 funding warning. No action was taken on the President's proposal. Although the Medicare trustees issued warnings each year from 2007 through 2013, no additional legislative proposals have been submitted to Congress pursuant to Section 802. Since the Medicare trustees did not issue funding warnings in their 2014, 2015, 2016, or 2017 reports, the President was not required to submit related legislation subsequent to the submission of his FY2015 through FY2019 budgets. However, as the Medicare trustees issued a funding warning in their 2018 report, the MMA provides that the President will be required to submit a responsive legislative proposal after the release of his FY2020 budget. The Recommendation Clause provides that the President "shall from time to time give to the Congress Information of the state of the Union, and recommend to their Consideration such Measures as he shall judge necessary and expedient." Courts have rarely been presented with the opportunity to interpret the scope of this clause. However, the text of the clause, read in conjunction with analogous case law, does not appear to support an interpretation that would prevent Congress from directing the President to submit legislative recommendations. The clause is perhaps most accurately characterized as establishing a right as opposed to a substantive source of authority --ensuring that the President may submit directly to Congress legislative proposals that he views as "necessary and expedient." Thus, this right would appear only to be infringed where Congress prevents the President from submitting his own legislative proposal or attempts to dictate the contents of a required legislative proposal. Under this reading, it is unlikely that Congress imposes an excessive burden on the President where it merely directs the President to submit a proposal, the contents of which remain within the President's discretion, in response to a specific trigger. Whereas the Department of Justice may assert that "any bill purporting to require the submission of recommendations is unconstitutional," no judicial decision has accepted such a broad proposition. In any year in which the MMA requires the President to submit draft Medicare funding legislation, the act directs that in each chamber, within three days of session after the proposal is received, the two floor leaders (or their designees) introduce a bill reflecting it, with the title "A bill to respond to a Medicare funding warning." This measure, or, under certain circumstances, an alternative Medicare funding measure, is potentially subject to consideration under fast track rules established by the statute, rather than under the regular rules and procedures that govern consideration of legislation in the two chambers. These expedited procedures place limits on committee consideration, as well as potentially on Members' ability to debate and amend legislation on the floor and to offer certain motions that would otherwise be in order. These procedures are designed to guarantee that each house will have an opportunity to consider legislation to respond to the funding warning. They do not guarantee, however, that (1) the President's specific proposal will be the one considered or (2) Congress will pass legislation to lower general revenue spending below the trigger amount. As noted above, either chamber may alter these procedures should a numerical majority choose to do so. The following description of the procedures and activities for the House thus serves as reference of how the procedures would otherwise work in the House. In response to President Bush's legislative proposal submitted on February 14, 2008, the House and the Senate both introduced a bill ( H.R. 5480 and S. 2662 respectively) on February 25, 2008. On July 24, 2008, the House of Representatives adopted H.Res. 1368 , a resolution providing that the expedited parliamentary procedures contained in Section 803 of the MMA would not apply in the House during the remainder of the 110 th Congress. Similar action was taken by the House on January 6, 2009, when it approved a rules package ( H.Res. 5 ) that nullified the trigger provision for the 111 th Congress. No action to waive these rules has been taken in subsequent Congresses. In any year in which the MMA requires the President to submit draft Medicare funding legislation, the committee(s) of referral must report Medicare funding legislation by June 30. For this purpose, any other bill with the same title as required for the President's proposal also qualifies as Medicare funding legislation, and the requirement to report legislation to address the Medicare funding warning applies whether or not the President has submitted a proposal. As a result, the committee may choose to report some other Medicare funding measure rather than that of the President. The chairman of the House Committee on the Budget is responsible for certifying whether or not any Medicare funding legislation (or any subsequent amendments to it) would eliminate the excess general revenue Medicare funding. Whether or not the reported measure is affirmatively certified as responding to the funding warning, the House may consider that measure under its regular procedures. However, if the House has not voted on final passage of an affirmatively certified measure by July 30, then after 30 more calendar days, including 5 days of session, any Member may offer a highly privileged motion to discharge a committee from further consideration of any Medicare funding legislation of which he or she is in favor, but only if it has been in committee for 30 days, and is affirmatively certified. The MMA describes these procedures as a fallback , in that they apply only if the House has not already voted on legislation affirmatively certified to respond to the funding warning (regardless of whether that legislation passed or not). In addition, once the House agrees to one such motion to discharge, the motion is no longer in order during that session of Congress. A motion to discharge made under this "fallback" provision must be made by a supporter, seconded by one-fifth of the House's membership (a quorum being present), and is debatable for one hour. If the House adopts the motion to discharge, the Speaker must, within three days of session thereafter, resolve the House into Committee of the Whole for consideration of the legislation. Debate on the measure is not to exceed 5 hours, and only amendments that have the affirmative certification of the Committee on the Budget are admitted. Debate on any amendment is not to exceed 1 hour, and the total time for consideration of all amendments is capped at 10 hours. At the conclusion of consideration, the committee rises and reports the legislation back to the House for a final dispositive vote. A motion to recommit the measure with or without instructions is not precluded. The statutory procedures provided in the Senate for Medicare funding legislation apply to a bill reflecting a presidential proposal pursuant to the MMA or to any other bill with the same title that either (1) was passed by the House or (2) contains matter within the jurisdiction of the Senate Committee on Finance (Finance Committee). A measure reflecting the President's proposal is to be referred to the Finance Committee. In a year in which the MMA requires the President to submit Medicare funding legislation, and whether or not he does so, if the Finance Committee has not reported the bill reflecting the President's proposal or some other Medicare funding legislation by June 30, then any Senator may move to discharge that committee from any single Medicare funding measure. Only one such motion to discharge is in order during a session of Congress. Debate on the motion to discharge is limited to two hours, a restriction which ensures that a vote on the motion cannot be prevented by a filibuster. In combination, these provisions afford the Senate only one assured opportunity to consider Medicare funding legislation, which will be either the measure the Finance Committee reports or the one specified in the discharge motion. In either case, the legislation the Senate will have the opportunity to consider may or may not be the one that embodies the President's proposal. After the date on which the Finance Committee has reported or been discharged from further consideration of Medicare funding legislation, it is in order for any Senator to move to proceed to consideration of the bill. The MMA does not explicitly make this motion non-debatable, although Senate precedent exists for treating as non-debatable a motion to proceed to consider a measure under procedures specified by statute. In the absence of such a limitation, it might be possible for opponents to use a filibuster to prevent this motion from coming to a vote. In any case, because the MMA establishes no further requirements regarding consideration, if the motion to proceed is agreed to, the Senate would consider the measure under its general rules. The statute, then, does not preclude a filibuster of the measure. Nor, if the House and Senate both pass a bill, does the act make any provision to expedite the resolution by conference committee or otherwise of differences between the two versions of Medicare funding legislation. As noted earlier, the Medicare HI and SMI Trust Funds are statutorily independent; this means that any funds raised for one fund cannot be used to pay expenses out of the other. However, the formula used to determine excess general revenue Medicare funding combines revenue streams from both the HI and SMI Trust Funds. Because of the way that the trigger formula is structured, the various methods that could be used to reduce the general revenue Medicare funding percentage would not necessarily reduce federal general revenue outlays (used to finance Parts B and D) or reduce the percentage in direct proportion to reductions in total spending. Specifically, to reduce the percentage, one could increase dedicated financing (e.g., payroll taxes or premiums) or reduce outlays (HI and/or SMI spending), or some combination of the two. In the example presented in Table 1 below, applying FY2012 CBO estimates to the equation shown in the " The Medicare Trigger " section of this report, the total expected outlays of $585.0 billion and $289.3 billion in dedicated revenues results in a level of general revenue funding of about 50.5%. Given this scenario, one option to reduce the general revenue percentage to 45% would be to increase payroll taxes by an amount sufficient to raise an additional $32.5 billion in dedicated revenues. Another option would be to decrease total outlays by reducing Part A (HI Trust Fund) spending. However, because the total Medicare outlays measure is included in both the top and bottom parts of the mathematical formula (i.e., the denominator as well as the numerator is reduced), a reduction in outlays would have less of an effect than an increase in dedicated revenues on the percentage of general revenue funding. Therefore a reduction of $59.0 billion in Part A funding would be needed to reduce general revenue funding to 45% (in contrast to the $32.5 billion increase in taxes). While the above options of increasing the payroll tax or lowering Part A spending would eliminate excess general revenue Medicare funding as defined under the Medicare trigger, these options would have no impact on actual federal general revenue spending (used to finance Parts B and D outlays) because Part A is primarily funded through payroll taxes. Similarly, continuing with the examples in Table 1 , one could reach the 45% general revenue spending level by increasing beneficiaries' Part B premiums by a percentage that would increase dedicated revenues by $32.5 billion. Although total Medicare outlays would remain the same, the general revenue percentage as defined by the trigger calculation and the level of Medicare spending financed through federal general revenues would both decline under this scenario. Alternatively, Part B outlays could be reduced. However, because approximately 25% of SMI spending is financed by premiums, income from premiums (which are calculated based on expected outlays) would also be reduced under this option (i.e., a reduction in Part B outlays would be partially offset by a reduction in dedicated revenues). Therefore, greater spending reductions would be needed under Part B than under Part A to achieve the same amount of reduction in the general revenue funding percentage. In this example, a reduction in Part B outlays of $108.2 billion would be needed to bring down the level of general revenue funding to 45%. Excess general revenue Medicare funding is one measure that can be used to depict the financial status of the Medicare program. Other measures, discussed in CRS Report R43122, Medicare Financial Status: In Brief include the date of HI insolvency, HI income and costs relative to payroll taxes, long-term unfunded obligations, and Medicare costs as a percentage of GDP. Proponents of the 45% threshold measurement believe that it can serve as an effective early warning system of the impact of Medicare spending on the federal budget, and that it forces fiscal responsibility. Opponents of the measure suggest that it does not adequately recognize a shift toward the provision of more services on an outpatient basis (thus shifting spending from Medicare Part A to Part B) or the impact of the Part D program on general revenue increases, and that other measures such as Medicare spending as a portion of total federal spending, are better ways to determine the health of the Medicare program.

The Medicare Prescription Drug, Improvement, and Modernization Act of 2003 (MMA; P.L. 108-173) requires the Medicare Board of Trustees to provide in its annual reports an expanded analysis of Medicare expenditures and revenues (Section 801 of the MMA). If the Medicare trustees determine that general revenue funding for Medicare is expected to exceed 45% of Medicare outlays for the current fiscal year or any of the next six fiscal years, a determination of excess general revenue Medicare funding is made. If the determination is issued for two consecutive years, a funding warning is issued which triggers certain presidential and congressional actions (Sections 802-804 of the MMA). Specifically, in the event of a funding warning, the President would be required to submit to Congress proposed legislation to respond to the funding warning within 15 days of submitting a budget for the succeeding year, and Congress would then be required to consider that legislation on an expedited basis. Because a determination of excess general revenue Medicare funding was issued in both the 2006 and the 2007 Medicare trustees' reports, the President was required to submit a legislative proposal to Congress within 15 days of submitting his FY2009 budget (in 2008) that would lower the ratio to the 45% level. Similarly, each of the subsequent annual reports of the Boards of Trustees through 2013 included an estimate that general revenue funding would exceed 45% at some point during the current or six subsequent fiscal years, thus triggering a response from the President and Congress. President George W. Bush submitted such a proposal in 2008, but no related legislation has been enacted. In each of their 2014 through 2016 reports, the Medicare trustees projected that general revenue Medicare funding would not exceed 45% of total Medicare outlays within seven fiscal years. Therefore, the Medicare trustees did not issue funding warnings in those years, and the President was not required to submit related legislative proposals subsequent to the release of the FY2015 through FY2019 budgets. However, in both their 2017 and 2018 reports, the Medicare trustees issued a determination of projected excess general revenue Medicare funding. Because such a determination was made in two consecutive years, a funding warning has been triggered and the MMA provides that the President will be required to submit a responsive legislative proposal after the release of his FY2020 budget (in 2019). The Medicare funding warning focuses attention on the impact of program spending on the federal budget, and it provides one measure of the financial health of the program. However, some options for reducing general revenue spending below the 45% level would have a greater impact than others. Proponents of the trigger maintain that it forces fiscal responsibility, whereas critics of the trigger suggest that other measures of Medicare spending, such as total Medicare spending as a portion of federal spending, would be more useful indicators.

Certain individuals and families without access to subsidized health insurance coverage may be eligible for premium tax credits. These premium credits, authorized under the Patient Protection and Affordable Care Act (ACA; P.L. 111-148 , as amended), apply toward the cost of purchasing specific types of health plans offered by private health insurance companies. Individuals who receive premium credits also may be eligible for subsidies that reduce cost-sharing expenses. To be eligible for premium tax credits and cost-sharing subsidies, individuals and families must enroll in health plans offered through health insurance exchanges and meet other criteria. Exchanges operate in every state and the District of Columbia (DC). Exchanges are not insurance companies; rather, they are marketplaces that offer private health plans to qualified individuals and small businesses. The ACA specifically requires exchanges to offer insurance options to individuals and to small businesses, so exchanges are structured to assist these two different types of customers. Consequently, each state has one exchange to serve individuals and families (an individual exchange ) and another to serve small businesses (a Small Business Health Options Program , or SHOP, exchange ). Health insurance companies that participate in the individual and SHOP exchanges must comply with numerous federal and state requirements. Among such requirements are restrictions related to the determination of premiums for exchange plans ( rating restrictions ). Insurance companies are prohibited from using health factors in determining premiums. However, they are allowed to vary premiums by age (within specified limits), geography, number of individuals enrolling in a plan, and smoking status (within specified limits). The dollar amount of the premium tax credit is based on a statutory formula and varies from individual to individual. Individuals who are eligible for the premium credits generally are required to contribute some amount toward the purchase of their health insurance. The premium credit is refundable, so individuals may claim the full credit amount when filing their taxes, even if they have little or no federal income tax liability. The credit also is advanceable, so individuals may choose to receive the credit in advance of filing taxes on a monthly basis to coincide with the payment of insurance premiums (technically, advance payments go directly to insurers). Advance payments automatically reduce monthly premiums by the credit amount. Therefore, the direct cost of insurance to an individual or family eligible for premium credits generally will be lower than the advertised cost for a given exchange plan. In order to be eligible to receive premium tax credits, individuals must meet the following criteria: file federal income tax returns; enroll in a plan through an individual exchange; have annual household income at or above 100% of the federal poverty level (FPL) but not more than 400% FPL; and not be eligible for minimum essential coverage (see " Not Eligible for Minimum Essential Coverage " section in this report), with exceptions. These eligibility criteria are discussed in greater detail below. Because the premium assistance is provided in the form of tax credits, such assistance is administered by the Internal Revenue Service (IRS) through the federal tax system. The premium credit process requires qualifying individuals to file federal income tax returns, even if their incomes are at levels that normally do not necessitate the filing of such returns. Married couples are required to file joint tax returns to claim the premium credit. The calculation and allocation of credit amounts may differ in the event of a change in tax-filing status during a given year (e.g., individuals who marry or divorce). Premium credits are available only to individuals and families enrolled in plans offered through individual exchanges; premium credits are not available through SHOP exchanges. Individuals may enroll in exchange plans if they (1) reside in a state in which an exchange was established; (2) are not incarcerated, except individuals in custody pending the disposition of charges; and (3) are citizens or have other lawful status. Undocumented individuals (individuals without proper documentation for legal residence) are prohibited from purchasing coverage through an exchange, even if they could pay the entire premium. Because the ACA prohibits undocumented individuals from obtaining exchange coverage, these individuals are not eligible for premium credits. Although certain individuals are not eligible to enroll in exchanges due to incarceration or legal status, their family members may still receive premium credits as long as these family members meet all eligibility criteria. Individuals generally must have household income within a statutorily defined range (based on FPL) to be eligible for premium credits, with some exceptions. Household income is measured according to the definition for modified adjusted gross income (MAGI). An individual whose MAGI is at or above 100% FPL up to and including 400% FPL may be eligible to receive premium credits. Table 1 displays the income ranges that correspond to the eligibility criteria for premium credits in 2018 (using poverty guidelines updated by the Department of Health and Human Services [HHS] for 2017). To be eligible for a premium credit, an individual may not be eligible for minimum essential coverage (MEC), with exceptions (described below). The ACA broadly defines MEC to include Medicare Part A; Medicare Advantage; Medicaid (with exceptions); the State Children's Health Insurance Program (CHIP); Tricare; Tricare for Life, a health care program administered by the Department of Veterans Affairs; the Peace Corps program; any government plan (local, state, federal), including the Federal Employees Health Benefits Program (FEHBP); any plan offered in the individual health insurance market; any employer-sponsored plan (including group plans regulated by a foreign government); any grandfathered health plan; any qualified health plan offered inside or outside of exchanges; and any other coverage (such as a state high-risk pool) recognized by the HHS Secretary. However, the ACA provides certain exceptions regarding eligibility for MEC and premium tax credits. An individual may be eligible for premium credits even if he or she is eligible for any of the following sources of MEC: the individual (non-group) health insurance market; an employer-sponsored health plan that is either unaffordable or inadequate; or limited benefits under the Medicaid program. Under the ACA, states have the option to expand Medicaid eligibility to include all non-elderly, nonpregnant individuals with incomes up to 138% FPL. If an individual who applied for premium credits through an exchange is determined to be eligible for Medicaid, the exchange must have that individual enrolled in Medicaid instead of an exchange plan. Therefore, in states that have expanded Medicaid eligibility to include individuals with incomes at or above 100% FPL (or any state in which such individuals currently are eligible for Medicaid), premium credit eligibility begins at the income level at which Medicaid eligibility ends. The amount of the premium tax credit varies from individual to individual. Calculation of the credit is based on the household income (i.e., MAGI) of the individual (and dependents), the premium for the exchange plan in which the individual (and dependents) is enrolled, and other factors. For simplicity's sake, the following formula may be used to calculate the credit: Premium for Standard Plan - Required Premium Contribution = Premium Tax Credit As mentioned in the " Background " section of this report, premiums are allowed to vary based on a few characteristics of the person (or family) seeking health insurance. Standard P lan refers to the second-lowest-cost silver plan (see text box in " Eligibility " section of this report) in the person's (or family's) local area. Required Premium Contribution refers to the amount that a premium credit-eligible individual (or family) may pay toward the exchange premium. The required premium contribution is capped according to household income, with such income measured relative to FPL (see Table 1 ). The cap requires lower-income individuals to contribute a smaller share of income toward the monthly premium, compared with the requirement for higher-income individuals (see Figure 1 ). The Premium Tax Credit is the difference between the premium and the required contribution. Given that the premium and required contribution vary from person to person, the premium credit amount likewise varies greatly. An extreme example is when the premium for the standard plan is very low, the tax credit may cover the entire premium and the individual may pay nothing toward the premium. The opposite extreme scenario, for some higher-income individuals, is when the required contribution exceeds the premium amount, leading to a credit of zero dollars, meaning the individual (or family) would pay the entire premium amount. To illustrate the premium credit calculation for 2018, consider a premium credit recipient living in Lebanon, KS--the geographic center of the continental United States--with household income of $18,090 (150% FPL, according to premium credit regulations). Such an individual would be required to contribute 4.03% of that income toward the premium for the standard plan in his or her local area (see Figure 1 ). In other words, the maximum amount that this person would pay for the year toward the standard plan is approximately $729 (that is, $18,090 x 4.03%), or around $61 per month. In contrast, an individual residing in the same area with income of $30,150 (250% FPL) would be required to contribute 8.10% of his or her income toward the premium for the same plan. The maximum amount this individual would pay for the standard plan would be around $2,442 for the year, or approximately $204 per month. A similar calculation is used to determine the required premium contribution for a family. For instance, consider a couple and one child residing in Lebanon, KS, who are eligible for premium tax credits with household income of $30,630 in 2018. For a family of this size, this income is equivalent to 150% FPL for premium credit purposes. Just as in the example above of the individual with income at 150% FPL, this family would be required to contribute 4.03% of its annual income toward the premium for the standard plan in its local area. This means that the maximum amount the family would pay for that plan is approximately $1,234 in 2018, or around $103 per month. Generally, the arithmetic difference between the premium and the individual's (or family's) required contribution is the tax credit amount provided to the individual (or family). Therefore, factors that affect either the premium or the required contribution (or both) will change the premium credit amount. The hypothetical examples below illustrate those changes based on the following selected factors: age, family size, and choice of metal plan. (For simplicity purposes, the premium, contribution, and credit amounts used in these examples have been rounded to the nearest dollar.) Consider the individual residing in Lebanon, KS, with annual household income of $18,090 (as discussed in the " Required Premium Contribution Examples " section of this report). This hypothetical person would be required to contribute about $61 per month toward the premium for the standard plan. If this person were 21 years of age, he or she would face a premium of $421 for the standard plan in his or her local area. Therefore, the amount of the monthly premium credit this individual would receive would be the difference between that premium and his or her required premium contribution, or $421 - $61 = $360. In other words, a 21-year-old resident of Lebanon, KS, with annual household income at 150% FPL who is enrolled in the standard plan that costs $421 per month would contribute $61 toward the monthly premium and receive a monthly credit of $360. In contrast, an older individual residing in the same area, with the same income level, would face a different monthly premium based on his or her age. For example, a 60-year-old individual would face a monthly premium of $1,143 for the same standard plan as the 21-year-old person. But given that an individual's required premium contribution is capped, the 60-year-old Lebanon resident would spend the same amount on the standard plan's premium as would the 21-year-old Lebanon resident because they have the same income level. The difference between these two hypothetical calculations is the amount of the credit. In the case of the 60-year-old individual, the amount of the monthly premium credit would be $1,082 (the arithmetic difference between the premium and the required premium contribution). The 21-year-old individual would face a less expensive monthly premium and thus would receive a lower monthly premium credit amount than would the 60-year-old individual for the same plan (see Table 2 ). Given that premiums for exchange plans (and similar plans offered outside of exchanges) are allowed to vary based on family size, this characteristic affects the calculation of the premium tax credit. For example, take the hypothetical couple and child residing in Lebanon, KS, with annual income at 150% FPL (as discussed in the " Required Premium Contribution Examples " section of this report). The family's required contribution toward the monthly premium for the standard plan in its local area is $103 per month. If you assume both of the adults are 21 years of age, the monthly premium for the standard plan in their area is $1,164. Therefore, this hypothetical family of three would receive a monthly premium credit of $1,061. If this hypothetical family instead had two children and income at 150% FPL for a family of four, but all other facts remained the same as in the previous example, the family of four's required premium contribution would be $124 per month. The family would face a monthly premium of $1,487 for the standard plan in its local area, which would result in a monthly premium credit of $1,363. Although the required premium contribution is based on a standard plan, an individual (or family) may choose to enroll in any metal plan and still be eligible for premium tax credits. However, when an eligible individual enrolls in a plan that is more expensive than the standard plan, that person must pay the additional premium amount. Using the same hypothetical 21-year-old individual from above (see Table 2 ), he or she would be required to pay $61 toward the monthly premium and would receive $360 as a premium credit for the standard plan. If this individual decided to enroll in the highest-cost gold plan instead of the standard plan, he or she would face a premium of $538. Because the individual chose a more expensive plan, he or she would be required to pay the difference in premiums. Specifically, this individual would be required to pay an additional $117 per month, on top of the required $61 monthly premium contribution (see Table 3 ). Therefore, the individual's total monthly premium contribution would be $178 after receiving a monthly premium credit of $360. As mentioned previously, an eligible individual (or family) may receive advance payments of the premium credit to coincide with when insurance premiums are due. For such an individual, advance payments are provided on a monthly basis and are based on income in the prior year's tax return. When an individual files his or her tax return for a given year, the total amount of advance payments he or she received in that tax year is reconciled with the amount he or she should have received. If an individual's income decreased during the year and he or she should have received a larger tax credit, the additional credit amount will be included in the individual's tax refund for the year or used to reduce the amount of taxes owed. By contrast, if an individual's income increased during the year and he or she received too much in premium credits, the excess amount will be repaid in the form of a tax payment. For individuals with incomes below 400% FPL, the repayment amounts are capped, with greater tax relief provided to individuals with lower incomes (see Table 4 ). The IRS has published preliminary data about the ACA tax credit in its annual "Statistics of Income" (SOI) reports. The most recently published SOI reports are for tax years 2014 and 2015. The following data provide summary statistics, for each tax year, about two overlapping taxpayer populations: individuals who received advance payments of the ACA tax credit and individuals who claimed the credit on their individual income tax returns. For tax year 2014, approximately 3.4 million tax returns indicated receipt of advance payments of the ACA tax credit, totaling to almost $12 billion. Of those 3.4 million returns, nearly 1.5 million taxpayers received advance payments that were less than what they were eligible for, and approximately 1.8 million taxpayers received advance payments that were more than what they were eligible for. The remaining difference (less than 60,000) represents taxpayers who received the correct amount in advance payments. The SOI data indicate that approximately 3.1 million tax returns for the 2014 tax year claimed a total of nearly $11.2 billion of ACA tax credit. The 3.1 million returns represent the number of taxpayers who were actually eligible for the ACA tax credit, based on the information provided in the 2014 tax returns. These eligible taxpayers represent those who did receive advance payments of the credit and those who claimed the credit after the end of the tax year. The IRS also has published limited tax credit data by state, county, and zip code. For tax year 2015, approximately 5.7 million tax returns indicated receipt of advance payments of the ACA tax credit, totaling to almost $20.2 billion. In comparison to the 2014 amounts mentioned above, the 2015 data represent a two-thirds increase in both tax return claims and advanced credit amounts. Of the 5.7 million returns indicating advance payments, more than 2.3 million taxpayers received advance payments that were less than what they were eligible for and nearly 3.3 million taxpayers received advance payments that were more than what they were eligible for. In addition, approximately 5 million tax returns for the 2015 tax year claimed a total of nearly $18.1 billion. This represents approximately a 60% increase in both tax return claims and claimed credit amounts compared to 2014. HHS regularly publishes data on persons selecting and enrolling in exchange plans, including individuals who were determined eligible for the premium tax credit. For 2017, HHS made reports and public-use files available with national enrollment data, as well as limited data by state, county, and zip code. As of February 2017, more than 8.7 million individuals were eligible for the ACA tax credit. This figure represents approximately 84% of all exchange enrollees. An individual who qualifies for the premium tax credit, is enrolled in a silver plan (see text box above, "Actuarial Value and Metal Plans"), and has annual household income no greater than 250% FPL is eligible for cost-sharing subsidies. The purpose of these subsidies is to reduce an individual's (or family's) expenses when he or she receives health services covered under the silver plan. There are two types of subsidies, and both are based on income (see descriptions below). Individuals who are eligible for cost-sharing assistance may receive both types of subsidies, as long as they meet the applicable eligibility requirements. The ACA requires the HHS Secretary to provide full reimbursements to insurers that provide cost-sharing subsidies. Federal outlays for such reimbursements totaled the following amounts: FY2014: $2.111 billion; FY2015: $5.382 billion; FY2016: $5.652 billion; and FY2017: $7.317 billion. Although the ACA authorized the cost-sharing subsidies and payments to reimburse insurers, it did not address the source of funds for such payments. The Obama Administration made cost-sharing subsidy payments to insurers using an appropriation that finances the premium tax credits. The House of Representatives filed suit, claiming that the payments violated the appropriations clause of the U.S. Constitution. After holding that the House has standing to sue the Obama Administration, the U.S. District Court for the District of Columbia concluded that the payment of the cost-sharing subsidies was unconstitutional for lack of a valid appropriation enacted by Congress. The court barred the Obama Administration from making the payments but stayed its decision pending appeal of the case. Following the November 2016 election, the court delayed the case to allow for nonjudicial resolution, including possible legislative action. Congress did not provide appropriations, and on October 13, 2017, the Trump Administration filed a notice announcing it would terminate payments for these subsidies beginning with the payment that was scheduled for October 18. However, the administrative decision to terminate cost-sharing reduction payments provides no relief to insurers that are required under federal law to provide subsidies to eligible individuals. Each metal plan limits the total amount an enrollee will be required to pay out of pocket for use of covered services in a year (referred to as an annual cost-sharing limit in this report). In other words, the amount an individual spends in a given year on health care services covered under his or her plan is capped. For 2018, the annual cost-sharing limit for self-only coverage is $7,350; the corresponding limit for family coverage is $14,700. One type of cost-sharing assistance reduces such limits (see Table 5 ). This cost-sharing subsidy reduces the annual limit faced by premium credit recipients with incomes up to and including 250% FPL; greater subsidy amounts are provided to those with lower incomes. In general, this cost-sharing assistance targets individuals and families that use a great deal of health care in a year and, therefore, have high cost-sharing expenses. Enrollees who use very little health care may not generate enough cost-sharing expenses to reach the annual limit. For example, consider the hypothetical individual who resides in Lebanon, KS, and has household income at 150% FPL (as discussed in the " Premium Tax Credit Examples " section of this report). A person eligible to receive cost-sharing subsidies would face an annual cost-sharing limit of $2,450. The practical effect of this reduction would occur when this individual spent up to that amount. For additional covered services received by the individual, the insurance company would pay the entire cost. Therefore, by reducing the annual cost-sharing limit, eligible individuals are required to spend less before benefitting from this financial assistance. The second type of cost-sharing subsidy also applies to premium credit recipients with incomes up to and including 250% FPL. For eligible individuals, the cost-sharing requirements (for the plans in which they have enrolled) are reduced to ensure that the plans cover a certain percentage of allowed health care expenses, on average. The practical effect of this cost-sharing subsidy is to increase the actuarial value (AV) of the exchange plan in which the person is enrolled ( Table 6 ), so enrollees face lower cost-sharing requirements than they would have without this assistance. Given that this type of cost-sharing subsidy directly affects cost-sharing requirements (e.g., lowers a deductible), both enrollees who use minimal health care and those who use a great deal of services may benefit from this assistance. To be eligible for cost-sharing subsidies, an individual must be enrolled in a silver plan, which already has an AV of 70% (see text box above, "Actuarial Value and Metal Plans"). For an individual who receives the subsidy referred to in Table 6 , the health plan will impose different cost-sharing requirements so that the silver plan will meet the applicable increased AV. The ACA does not specify how a plan should reduce cost-sharing requirements to increase the AV from 70% to one of the higher AVs. Through regulations, HHS requires each insurance company that offers a plan subject to these cost-sharing subsidies to develop variations of its silver plan; these silver plan variations must comply with the higher levels of actuarial value (73%, 87%, and 94%). When an individual is determined by an exchange to be eligible for a cost-sharing subsidy, the person is enrolled in the silver plan variation that corresponds with his or her income. Consider the same hypothetical individual discussed in the previous section. Since this person's income is at 150% FPL, if he or she receives this type of subsidy, the silver plan in which he or she is enrolled will have an AV of 94% (as indicated in Table 6 ), instead of the usual 70% AV for silver plans. This marked change in AV entails notable reductions in cost-sharing requirements. For example, the annual medical deductible of the standard plan in the local area for this hypothetical individual is $3,000 in 2018. However, the plan variation with a 94% AV has a deductible of $250. The practical effect for this hypothetical person is that he or she would have to spend $250, instead of $3,000, before the insurer would begin to pay for medical claims associated with that person's use of covered services.

Certain individuals without access to subsidized health insurance coverage may be eligible for premium tax credits, as established under the Patient Protection and Affordable Care Act (ACA; P.L. 111-148, as amended). The dollar amount of the premium credit varies from individual to individual, based on a formula specified in statute. Individuals who are eligible for the premium credit, however, generally are still required to contribute some amount toward the purchase of health insurance. In order to be eligible to receive premium tax credits, individuals must have annual household income at or above 100% of the federal poverty level (FPL) but not more than 400% FPL; not be eligible for certain types of health insurance coverage, with exceptions; file federal income tax returns; and enroll in a plan through an individual exchange. Exchanges are not insurance companies; rather, exchanges serve as marketplaces for the purchase of health insurance. They operate in every state and the District of Columbia (DC). The premium credit is refundable, so individuals may claim the full credit amount when filing their taxes, even if they have little or no federal income tax liability. The credit also is advanceable, so individuals may choose to receive the credit on a monthly basis to coincide with the payment of insurance premiums. The ACA premium credit is financed through permanent appropriations authorized under the federal tax code. Individuals who receive premium credits also may be eligible for subsidies that reduce cost-sharing expenses. The ACA established two types of cost-sharing subsidies (or cost-sharing reductions). One type of subsidy reduces annual cost-sharing limits; the other directly reduces cost-sharing requirements (e.g., lowers a deductible). Individuals who are eligible for cost-sharing reductions may receive both types. Although applicable health plans must provide these cost-sharing reductions, such plans are no longer receiving payments to reimburse them for the cost of providing the subsidies.

Insurance is one of three primary sectors of the financial services industry. Unlike the other two, banks and securities, insurance is primarily regulated at the state, rather than federal, level. The primacy of state regulation dates back to 1868 when the Supreme Court found that insurance did not constitute interstate commerce, and thus did not fall under the powers granted the federal government in the Constitution. In 1944, however, the Court cast doubt on this finding. Preferring to leave the state regulatory system intact in the aftermath of this decision, Congress passed the McCarran-Ferguson Act of 1945, which reaffirmed the states as principal regulators of insurance. Over the years since 1945, congressional interest in the possibility of repealing or amending McCarran-Ferguson and reclaiming authority over insurance regulation has waxed and waned. In 1974, Congress passed the Employee Retirement Income Security Act (ERISA) preempting state laws governing many health benefit plans offered by employers, thus essentially federalizing much of the regulation of health insurance. In 1980, Congress curtailed the authority of the Federal Trade Commission (FTC) to investigate the insurance industry, reducing a small avenue of federal oversight on insurance. In the early 1990s, a bill to repeal the limited antitrust exemption granted insurers in McCarran-Ferguson, and thus expand federal oversight of insurance, was reported out of committee in the House, but never reached the House floor. In 1999, Congress passed the Gramm-Leach-Bliley Act (GLBA), which specifically reaffirmed the states as the functional regulators of insurance. GLBA may have statutorily reaffirmed the primacy of state regulation of insurance, but it also unleashed market forces that were already encouraging a greater federal role. GLBA removed legal barriers between securities firms, banks, and insurers, which, along with improved technology, have been an important factor in creating more direct competition among the three groups. Many financial products have converged, so that products with similar economic outcomes may be available from different financial services firms with dramatically different regulators. Insurers face 50 different state regulators and state laws, many of which differ on some particulars of insurance regulation. This has led to industry complaints of overlapping, and sometimes contradictory, regulatory edicts driving up the cost of compliance and increasing the time necessary to bring new products to market. These complaints existed prior to GLBA, but the insurance industry generally resisted federalization of insurance regulation at the time. Facing a new world of competition, however, the industry split, with larger insurers tending to favor some form of federal regulation, and smaller insurers tending to favor a continuation of the state regulatory system. Life insurers tend to more directly compete with banks and securities firms, so they have tended to favor some form of federal charter more than property/casualty insurers. Some members of Congress have responded to the changing environment in the financial services industry with a variety of legislation. In the 108 th Congress, Senator Ernest Hollings introduced S. 1373 to create a mandatory federal charter for insurance. In the 108 th and 109 th Congresses, Representative Richard Baker drafted, but never introduced, the SMART Act that would have left the states the primary regulators, but harmonized the system through various federal preemptions. The most consistent response has been the introduction of legislation calling for an Optional Federal Charter (OFC) for insurance. OFC legislation was first introduced in the 107 th Congress, with bills being introduced in the 109 th and 110 th Congresses as well. Specifics of OFC legislation can vary widely, but the common thread is the creation of a dual regulatory system, inspired by the current banking regulatory system. OFC bills generally would create a federal insurance regulator that would operate concurrently with the present state system. Insurers would be able to choose whether to take out a federal charter, which would exempt them from most state insurance regulations, or to continue under a state charter and the 50 state system of insurance regulation. Given the greater uniformity of life insurance products and the greater competition faced by life insurers, some have suggested the possibility of OFC legislation that would apply only to life insurers, but no such bills have been introduced. The recent financial crisis affected the debate over federal chartering for insurers in a variety of ways. Some aspects of the crisis gave additional arguments for federal chartering, whereas other aspects have given additional arguments against federal chartering. One specific concern that many have advanced in the crisis has been the negative aspects of allowing financial institutions to choose their regulators. The broad federal charter bill in the 111 th Congress, H.R. 1880 , addressed this by adding some mandatory aspects to a framework similar to the previous OFC bills. During the December 2, 2009, House Financial Services Committee markup of H.R. 2609 , a bill to create a Federal Office of Insurance, two amendments were offered to create federal licenses and regulation of specific lines of insurance. Representative Dennis Moore offered an amendment (no. 3) that would have created an optional federal license for reinsurers, while Representatives Ed Royce and Melissa Bean offered an amendment (no. 7) that would have created an optional federal license for financial guarantee insurers. Both were withdrawn before votes were taken on the amendments. H.R. 2609 was incorporated into H.R. 4173 , which was ultimately enacted as the Dodd-Frank Act and included some insurance provisions, but did not include a federal charter for insurance. Representative Moore introduced his amendment creating a federal license for reinsurers as a standalone bill, H.R. 6529 , on December 16, 2010. Many different arguments have been advanced for and against a dual regulatory system for insurance. While taking no position in this debate, many of these arguments are listed below. In addition to the principal argument that the regulation of insurance companies needs to be overhauled at the federal level to enable insurers to become more competitive with other federally regulated financial institutions in the post-GLBA environment, other arguments advanced for dual chartering have included the following: The recent financial crisis has shown that some insurers can present systemic risk and therefore should be regulated by a regulator with a broader outlook. A federal insurance regulator could be a knowledgeable voice and an insurance advocate in Washington, DC. (The Dodd-Frank Act addressed this to some degree through the creation of a "Federal Insurance Office," though this office has no regulatory powers.) The Comptroller of the Currency has successfully promoted the expansion of bank products through preemption of state laws, providing a model for the insurance sector. The increase of "speed to market" for product approval so insurers will not be at a disadvantage in product creation and delivery. The creation of a regulatory environment more accommodating of growth and innovation as a result of competition between federal and state regulators. The ability to achieve national treatment, so that a single charter would allow insurers to do business in all states and avoid higher costs of state regulation due to the need to comply with up to 50 state regulators. Potential difficulty insurers face in international trade without a regulator at the national level. Greater supply of insurance and lower cost to consumers as insurance companies are forced to compete on a national scale. The arguments of those who oppose federal regulation of insurance companies, preferring that the state insurance regulatory system be maintained, have included the following: State regulated insurers have performed relatively well through the financial crisis, underscoring the quality of state regulation. State insurance regulators have a better understanding of local markets and conditions that would a federal regulator. State regulation is more flexible and adaptable to local conditions. The diversity of state regulation reduces the impact of any poor regulation and promotes innovation and good regulation. There are strong incentives, such as those provided by direct election, for state regulators to do the job effectively at the state level. The risk that the new federal bureaucracy would end up being redundant and costly. Fiscal damage to the states should state premium taxes be reduced by a federal system. The fragmentation of the overall insurance regulatory system that could result from dual chartering and state/federal oversight. The possibility of a "race to the bottom" as state and federal regulators compete to give insurers more favorable treatment and thus secure greater oversight authority and budget. In the abstract, the federal chartering question could be simply about the "who" of regulation. Should it be the federal government, the states, or some combination of the two? In practice, however, federal chartering legislation has had much to say about the "how" of regulation. Should the government continue the same fine degree of industry oversight that states have practiced in the past? Aside from Senator Hollings' bill in the 108 th Congress, the federal chartering bills that have been introduced to this point have tended to answer the latter question negatively--the federal regulator to be created would exercise less regulatory oversight than would most state regulators. This deregulatory aspect of past bills has been source of controversy in addition to the introduction of federal regulation itself. Representatives Melissa Bean and Edward Royce introduced H.R. 1880 in the House on April 2, 2009. The bill was referred to the House Financial Services Committee, House Judiciary Committee, and House Energy and Commerce Committee. No hearings or markups were held on this bill. H.R. 1880 would have created a federal chartering and regulatory apparatus for the insurance industry, including insurers, insurance agencies, and independent insurance producers. The Office of National Insurance (ONI) and a National Insurance Commissioner (NIC) would have been established in the Department of the Treasury, but with significant independence; the Secretary of the Treasury would have been forbidden from interfering in specific matters before the commissioner; the ONI's budget would have been funded by fees and assessments on insurers; and the commissioner would have been appointed by the President, and confirmed by the Senate for a five-year term. These terms are similar to those of other financial regulators, such as the Office of the Comptroller of the Currency. The federal regulatory system in H.R. 1880 would have applied to property/casualty and life insurance and reinsurance, with the exception of title insurance. Federally licensed insurance producers were specifically allowed to sell surplus lines insurance. Holders of a national charter or license would have been exempt from most state insurance laws, including "any form of licensing, examination, reporting, regulation, or supervision by a State relating to the insurance operations of such insurer." Thus, nationally licensed insurers, agencies, and producers would have been able to operate in the entire United States without fulfilling the requirements of the 50 states' insurance laws. This exemption, however, did not extend to state premium tax laws, so national insurers would have continued to pay these taxes. The bill would have affected state taxes with regard to surplus lines insurance, forbidding states that are not the home state of the insured from collecting these taxes. In terms of the substance of regulation, the most significant specific change in H.R. 1880 compared with the way most states currently regulate insurance involves regulation of insurance rates and forms. Currently every state has some measure of rate and form regulation. In some states, insurers must get specific prior approval for changes to rates and forms, whereas in others insurers may have some freedom to change rates and forms with the possibility that the state insurance commissioner could disallow the change after the fact. This bill, however, would have specifically disallowed the NIC from regulating insurance rates. With regard to form regulation, the commissioner would have had the power to set general form requirements and insurers would have been required to file insurance forms with the commissioner along with a certification that the forms met the established requirements. H.R. 1880 would have specifically addressed the issue of systemic risk brought to the fore in the recent financial crisis in two ways. It would have required that a financial regulator other than the ONI be designated a systemic risk regulator for insurance with power over both national insurers and state insurers. This regulator would have had broad oversight powers, including the ability, in consultation with the NIC, to require an insurer be federally chartered. H.R. 1880 would also have created a "Coordinating National Council for Financial Regulators" made up of the heads of the various federal financial regulators along with the Secretary of the Treasury. This council would have been responsible for monitoring the financial system for systemic risk with the specific power to determine when the systemic risk regulator could issue a rule or direct order covering an insurer that presented systemic risk. H.R. 1880 shared many aspects with previous optional federal chartering bills, including legislation introduced by Representatives Bean and Royce. Under H.R. 1880 , many insurers would have had the option to choose whether to operate under a federal or state system. The system to be put in place by the bill, however, has two specific non-optional aspects: (1) The NIC had the specific authority to deny an application from a national insurer to convert to a state charter; and (2) the systemic risk regulator had the specific authority to require an insurer to become federally chartered. Representative Dennis Moore introduced H.R. 6529 on December 16, 2010. It was referred to the House Committee on Financial Services but no hearings or markups were held on the bill. H.R. 6529 would have created a federal license for reinsurers. The licensing and regulatory authority would rest with the Federal Insurance Office, which was created under the Dodd-Frank Act, which would have the authority to determine that state laws were inconsistent with federal law and thus preempted. Senators John Sununu and Tim Johnson introduced S. 40 on May 24, 2007 and Representatives Melissa Bean and Edward Royce introduced H.R. 3200 on July 26, 2007. The bills were referred to the relevant committees (Senate Banking, Housing, and Urban Affairs, House Financial Services, and House Judiciary), but neither was the specific subject of hearings or markups. Two general hearings on insurance regulatory reform, however, were held by the House Financial Services Subcommittee on Capital Markets, Insurance, and Government Sponsored Enterprises in October 2007, and the possibility of an optional federal charter was a major topic of discussion in the subcommittee. S. 40 and H.R. 3200 were very similar, but not identical bills. Both would have created the option of a federal charter for the insurance industry, including insurers, insurance agencies, and independent insurance producers. The bills would have created a federal regulatory and supervisory apparatus, including an Office of National Insurance and a National Insurance Commissioner. This federal regulator would generally have been overseen by the Secretary of the Treasury, but the secretary would have been forbidden from interfering in specific matters before the commissioner. The budget for the office would have been paid for by fees and assessments on insurers. The commissioner would have been appointed by the President, and confirmed by the Senate for a five-year term. Holders of a national license would have been exempt from most state insurance laws. Thus, nationally licensed insurers, agencies, and producers would have been able to operate in the entire United States without fulfilling the requirements of the 50 states' insurance laws. Some significant aspects of the bills included the following: The federal system would have applied to property/casualty and life insurance, except for title insurance and including surplus lines insurance. Rate regulation would not have been applicable to national insurers. Form regulation, the ability of the regulator to control what will and will not be included in an insurance policy, would have been reduced substantially compared with most states. Fees covering the cost of the system would have been assessed on those operating under the federal system. National insurers would have continued to pay state premium taxes, so there should be no loss of premium tax revenue to the states. National insurers would have continued to be subject to state laws requiring participation in residual market entities, but only if rates charged by the residual market entity covers all costs incurred, and only if there were no rate and form requirements concurrent with participation. Reform of the state regulation of surplus lines insurance--only the state in which the insured resides or does business would be allowed to tax surplus lines insurance. National insurance producers would have been allowed to sell surplus lines insurance. Would have applied federal antitrust laws to national insurers, except to the extent that state laws continue to apply to them. Differences between S. 40 and H.R. 3200 are relatively minor, including the following: H.R. 3200 would have specifically allowed non-U.S. reinsurers to file financial data in accordance with International Financial Reporting Standards. H.R. 3200 would have limited jurisdiction over non-U.S. reinsurers to federal courts, rather than including state and local courts. H.R. 3200 would have broadened slightly and clarify antifraud language. Beyond the general aspects inherent in the OFC concept, such as the dual, competing regulatory structures and uniform regulation across the country, the most striking specific aspect of S. 40 and H.R. 3200 was the lessening of the rate and form regulation under these bills as compared to the current system. Currently every state has some measure of rate and form regulation. In some states, insurers must get specific prior approval for changes to rates and forms, while in others insurers may have some freedom to change rates and forms with the possibility that the state insurance commissioner could disallow the change after the fact. S. 40 and H.R. 3200 specifically disallowed rate and form regulation for national property/casualty insurers. Such insurers would have been required only to maintain copies of the policy forms that they use. National life insurers would have been subject to general standards and a requirement to file forms with the commissioner before these forms would have been used. Senators John Sununu and Tim Johnson introduced S. 2509 on April 5, 2006. The House companion, H.R. 6225 was introduced on October 18, 2006. Neither bill saw direct committee action, although S. 2509 was repeatedly discussed at a hearing on "Perspectives in Insurance Regulation," held by the Senate Banking, Housing, and Urban Affairs Committee on July 18, 2006. These bills were very similar to the bills of the same name introduced in the 110 th Congress and discussed above. Differences between the bills in the two Congresses included the following: The 2006 bills did not address surplus lines insurance. The 2007 bills added language requiring national insurer compliance with anti-money laundering laws. The 2007 bills specifically exclude national insurers from offering title insurance. The 2007 bills included new guaranty fund language, changing the focus from a qualified state, to a qualified association or fund. If a state's guaranty fund is not qualified, then the national insurers operating in that state must join the national guaranty fund to be established by the NIC. On July 8, 2003, Senator Ernest Hollings introduced S. 1373 , "A bill to authorize and direct the Secretary of Commerce, through an independent commission within the Department of Commerce, to protect consumers by regulating the interstate sale of insurance, and for other purposes." The bill was referred to the Senate Commerce, Science, and Transportation Committee, where it was discussed in a general hearing on insurance regulation but was not acted upon further. Senator Hollings retired following the 108 th Congress. S. 1373 would have created a mandatory federal charter for interstate property/casualty and life insurers, leaving only single state insurers to be regulated by the state where they were domiciled and operated. It thus would have preempted most current state regulation of insurance. Significant aspects of the bill included the following: Creation of a federal commission within the Department of Commerce to regulate the interstate business of property/casualty and life insurance. Grant of full regulatory powers to the commission, including licensure, rate and form approval, regulation of solvency, and regulation of market conduct. Repeal of the antitrust exemptions in the McCarran-Ferguson Act. Creation of a federal guaranty fund. H.R. 3766 was introduced on February 14, 2002, by Representative John LaFalce. It would have created an optional federal charter for "national insurers," but not for insurance agencies, brokers, or agents. It would have created a new federal agency within the Treasury Department, known as the Office of National Insurers and headed by a director, rather than a commissioner. Other significant aspects of H.R. 3766 included the following: The federal charter would have provided for a national insurer to underwrite both life insurance and property/casualty insurance. The director would have had general regulatory authority over national insurers, including solvency oversight and policy forms, but rate regulation would have been left with state insurance regulators. Even though the legislation had no provision for the licensing of insurance producers, the director would have had the authority to enforce unfair and deceptive practices rules against state-licensed producers with respect to the sale of insurance products issued by national insurers, and all states would have been subject to federal minimum standards. National insurers would have been encouraged to invest in the communities in which they sell policies. National insurers would have been required to file reports containing community sales data for use by federal regulators in combating insurance redlining. Further, national insurers would have been prohibited from refusing to insure, or limiting coverage on a property, based solely on its geographic location. This proposal was reportedly introduced late in 2001 by Senator Charles Schumer, but was never assigned a number, nor referred to either the Senate Commerce Committee or the Senate Banking, Housing, and Urban Affairs Committee. A draft of this proposal provided that the chartering, supervision, and regulation of National Insurance Companies and National Insurance Agencies be administered by the federal government in a newly created federal agency within the Treasury Department. The proposed agency, the Office of the National Insurance Commissioner, would have been headed by the NIC, appointed for a five-year term by the President and subject to Senate confirmation. National insurers and agents would have been exempt from most state insurance law. Significant aspects of the bill included the following: application to all lines of insurance, including life, health, and property/casualty; imposition of fees as necessary to cover the expenses of the federal apparatus; and requirement that NICs participate in "qualified" state insurance guaranty associations and establishment of a federal backup guaranty association to cover "non-qualifying" states. The broad powers granted to the NIC were not to include the authority to regulate rates or policy forms. Nor would the Schumer proposal have exempted federally chartered NICs from antitrust laws, except for purposes of preparing policy forms and participating in state residual market programs such as assigned risk pools in automobile insurance. The federal license would have specified the line or lines of insurance a NIC could underwrite, and no single NIC could be licensed to underwrite both life/health insurance and property/casualty insurance, although an affiliated group of insurance companies (state and/or federally chartered) could have included separate companies writing those different lines of insurance.

Insurance is one of three primary sectors of the financial services industry. Unlike the other two, banks and securities, insurance is primarily regulated at the state, rather than federal, level. The primacy of state regulation dates back to 1868 when the Supreme Court found in Paul v. Virginia (75 U.S. (8 Wall.) 168 (1868)) that insurance did not constitute interstate commerce, and thus did not fall under the powers granted the federal government in the Constitution. In 1944, however, the Court cast doubt on this finding in United States v. South-Eastern Underwriters Association (322 U.S. 533 (1944)). Preferring to leave the state regulatory system intact in the aftermath of this decision, Congress passed the McCarran-Ferguson Act of 1945 (P.L. 79-15, 59 Stat. 33), which reaffirmed the states as principal regulators of insurance. Over the years since 1945, congressional interest in the possibility of repealing McCarran-Ferguson and reclaiming authority over insurance regulation has waxed and waned. Particularly since the Gramm-Leach-Bliley Act of 1999 (P.L. 106-102, 113 Stat. 1338), the financial services industry has seen increased competition among U.S. banks, insurers, and securities firms and on a global scale. Some have complained that the state regulatory system puts insurers at a competitive disadvantage. Whereas the insurance industry had previously been united in preferring the state system, it has now splintered, with larger insurers tending to argue for a federal system and smaller insurers tending to favor the state system. Some members of Congress have responded with different proposals ranging from a complete federalization of the interstate insurance industry, to leaving the state system intact with limited federal standards and preemptions. A common proposal in the past has been for an Optional Federal Charter (OFC) for the insurance industry. This idea borrows the idea of a dual regulatory system from the banking system. Both the states and the federal government would offer a chartering system for insurers, with the insurers having the choice between the two. OFC legislation was offered in the 107th, 109th, and 110th Congresses. Proponents of OFC legislation typically have cited the efficiencies that could be gained from a uniform system, along with the ability of a federal regulator to better address the complexities of the current insurance market and ongoing financial crisis as well as the need for a single federal voice for the insurance industry in international negotiations. Opponents of OFC legislation have been typically concerned with the inability of a federal regulator to take into account local conditions, the lack of consumer service that could result from a nonlocal administrator in Washington, DC, and the overall deregulation contained in some of the OFC proposals. The recent financial crisis gave greater urgency to calls for federal oversight of insurance and has changed the tenor of the debate. The National Insurance Consumer Protection Act of 2009 (H.R. 1880) was introduced in the 111th Congress by two previous sponsors of OFC legislation. This bill differed significantly from previous OFC bills as it included the creation of a new systemic risk regulator with the power to mandate the adoption of a federal charter by some insurers. The broad Dodd-Frank Act (P.L. 111-203) that was enacted to reform the financial system included some insurance aspects, but did not include a federal charter for insurance. Such legislation has not been introduced in the 112th Congress. This report offers a brief analysis of the forces prompting federal chartering legislation, followed by a discussion of the arguments for and against a federal charter, and summaries of previous legislation. It will be updated as legislative events warrant.

Traditionally, the exclusive locales for stock trades were exchanges such as the New York Stock Exchange (NYSE), the American Stock Exchange (AMEX), and NASDAQ. In recent decades, cheaper and more powerful computer-based technology and at least two Securities and Exchange Commission (SEC) regulations helped give rise to an array of alternative trading venues, including a new type called "dark pools." Although it is sinister sounding to some, the "dark" appellation simply means that dark pools do not publicly display traders' buy and sell interests (quotes) as the traditional "lit" platforms do. This opacity attracted institutional investors (such as pensions and mutual funds), which became the pools' initial clients. Concerned about potentially harmful, market-moving information leaks about their intended trades, these big investors believed that the dark pools' concealed quotes helped reduce the riskiness of their trades. Securities regulators and state officials have raised policy concerns about the pools, as have Members of Congress in various committee oversight hearings. Such concerns include the impact of the pools on market quality, their lack of pre-trade transparency, transparency about whether the pools allow high-frequency trading (HFT), and to what extent they do so. This report explains what dark pools are, outlines recent developments of significance to the pools (including public policy and regulatory developments), and examines various current public policy concerns. Alternative trading systems (ATSs) can be subdivided into electronic communication networks (ECNs) and dark pools. ATSs broadly are broker-dealer firms that match the orders of multiple buyers and sellers according to established, non-discretionary methods. They have been around since the late 1960s and grew in popularity in the mid-1990s as technological developments made it easier for broker-dealers to match buy and sell orders. Their growth also benefitted from the SEC's 1998 adoption of a new regulatory framework, Regulation ATS (Reg ATS). Reg ATS sought to reduce barriers to entry for such systems while also promoting competition and innovation and regulating the exchange functions that they performed. An ECN publicly displays its best orders in the consolidated quote stream--as exchanges such as the NYSE and NASDAQ do--and allows their stock trade offers (known as quotes) to be accessed by investors. Over the last decade, ECNs have been widely perceived to have benefited the equity market through such features as faster trading technologies, innovative pricing strategies, and robust inter-market linkages. Two of the better known independent ECNs are INET and Archipelago. Other ECNs, such as BATS and Direct Edge, have merged with registered securities exchanges or have themselves become exchanges. The ATSs, including the ECNs, have collectively gained growing equity trading market share through the years. By various accounts, the competitive pressure from the ATSs, including the ECNs, has led legacy exchanges such as the NYSE to enhance the customer trading experience. Another kind of ATS, "dark pools," do not provide quotes into the pre-trade public quote stream as is generally required of trades on the NASDAQ, the stock exchanges, and ECNs. They publish trade data only after transactions occur. Some argue that post-trade disclosure is more informative. Generally, dark pools are said to merely indicate that the trade was executed off an exchange and do not identify themselves as the pool that executed the trade. Also, unlike NASDAQ and the exchanges, dark pools do not guarantee trade execution, which means that orders sometimes go unfilled. More specifically, when an investor places an order to buy or sell on a "lit" trading venue, the venue typically makes that quote available to the public. Within dark pools, however, traders often become aware of the existence of potential trading counterparties only after they have submitted their orders. Alternatively, a trader may signal to a limited number of traders who are also clients of a dark pool of their interest in either buying or selling a security. These "indications of interest" in dark pools are similar to the conventional quote on the lit exchanges but may display fewer elements of the trading interest. This pre-trade opacity initially attracted institutional investors that wanted to anonymously trade blocks of shares without triggering unfavorable price movements. There is a widely held view that rules adopted by the SEC in 2005, Regulation National Market System (Reg NMS), boosted the growth of the dark pools. Reg NMS was aimed at fostering competition among individual markets and among individual orders by promoting efficient and fair price formation across securities markets. Currently, there are about 40 dark pools that trade in domestic markets. Primarily trading NASDAQ- and NYSE-listed stocks, they now account for about 15% of the overall trading volume of such stocks. Dark pools have contributed to today's more fragmented equities market, which also includes about 11 exchanges and more than 200 broker-dealers that execute retail trades via their own stock inventories--a process known as direct internalization . Together, dark pools and internalization processes--both of which are generally exempt from requirements to display pre-trade quotes--constitute the bulk of what are alternately called dark trading, unlit trades, and off-exchange trading. By some estimates, internalization may account for about 60% of dark trades, whereas dark pools account for about 40%. Dark pools have also enabled the brokers who own them to charge traders a fee for access to the order flow in the dark pools. This practice is sometimes referred to as indirect internalization . In his book Flash Boys , Michael Lewis describes instances in which HFT firms that paid for access to dark pools preyed upon the pool's retail order flow, sometimes by front-running those orders. Front-running refers to the practice of trading ahead of a large order to benefit from the anticipated price movement that the large order will create. The most common example of front-running is when an individual trader buys shares of a stock just before a large institutional order to buy, which may cause a rapid, small increase in the stock's price. The trader can later sell the order back to the institutional investor or to the market at the slightly higher price. While certain forms of front-running are illegal, the legality depends on the circumstances of the situation. Dark pools have been divided into several structural subgroups, including Broker-dealer owned. Some large broker-dealers have created dark pools for their clients and at times for the benefit of their own proprietary traders. These dark pools reportedly derive their share prices from the broker-dealer's order flow. As a consequence, they are said to provide some price discovery. Examples reportedly include Credit Suisse's CrossFinder, Goldman Sachs's Sigma X, and Morgan Stanley's MS Pool. Broker-dealers dominate the dark pool business: Domestically, Credit Suisse Group AG, UBS, Bank of America Corporation's Merrill Lynch, Deutsche Bank, and Morgan Stanley own the largest dark pools. Agency broker or exchange-owned. These dark pools act as agents, not principals. The trades that they conduct are based on the security prices that derive from the exchanges. As such, they have no price discovery function. Examples of agency broker dark pools include Liquidnet and ITG Posit, while exchange-owned dark pools include those offered by BATS and the NYSE. Electronic market maker. These dark pools are affiliated with independent securities operators, such as Getco and Knight, which operate as principals for their own accounts. Like the aforementioned broker-dealer-owned dark pools, the transaction prices in pools are not calculated from the national best bid and offer (NBBO). As such, the dark pools do not materially contribute to price discovery. Economists perceive a mix of non-regulatory and regulatory factors to have played roles in boosting the popularity of dark pools, which reportedly grew from a share of about 4% of overall trading volume in 2008 to about 15% in 2013. Several of them are described below. There are at least five key non-regulatory factors: 1. A general fall in the level of market volatility. There is a perspective that when share price volatility is more pronounced, resulting in greater trading uncertainty, many large investors have greater interest in quickly and reliably getting their trades executed. This is widely seen as a particular advantage of NASDAQ and exchanges such as the NYSE. According to Justin Schack, managing director of Rosenblatt Securities, a financial firm that does market analysis, "When prices are really swinging around, traders seem to prefer the certainty of displayed-market price discovery and the generally more-robust technology on the exchanges to dark pools and other off-exchange destinations." By some measures, since about 2009, share price volatility has generally declined, helping to boost the demand for the anonymity of dark pool trading. 2. Potential t echnological m ishaps. Another catalyst in the shift to dark pools reportedly involves investor interest in avoiding technological mishaps that have occurred on the NASDAQ and large exchanges such as the NYSE--and avoiding HFT firms that trade on such lit platforms. 3. Low c omparative t rading f ees. Dark pools tend to charge lower fees for trades than do the NASDAQ and the exchanges. Relatedly, dark pool traders' total transaction costs tend to be lower than costs on exchanges in part because within the pools, large orders can be subdivided into smaller orders, potentially enabling simpler and faster execution. In addition, the pools often charge lower per-share fees than do the exchanges. 4. Trader a utonomy. Dark pools give traders comparatively more autonomy in the choice of the opposing buyers and sellers, potentially avoiding problematic traders, such as some allegedly predatory HFT firms. 5. Trade e xecution e fficiency. Dark pools can be a valuable execution tool for large orders as well as stocks, which may be more difficult to trade because they have wider bid-ask spreads or lower market liquidity. Two major SEC-adopted regulations--Reg ATS and Regulation National Market System (Reg NMS)--are also commonly cited as pivotal in the proliferation of dark pools. 1. Reg ATS. In 1998, the SEC adopted a new regulatory framework, Reg ATS, as a set of regulations in the Securities Exchange Act of 1934 (15 U.S.C. 78a et seq). The regulation sought to reduce barriers to entry while promoting competition and innovation and regulating the ATS's exchange functions. Under Reg ATS, dark pools are required to register either as exchanges with the SEC or as broker-dealers with the Financial Industry Regulatory Authority (FINRA), the frontline regulator of SEC-registered broker-dealers. Dark pools are subject to the same rules that govern trading on an exchange or by a broker-dealer. However, unlike exchanges, they are not required to publicize ongoing offers to buy or sell stocks, called quotes. If an ATS displays orders to more than one person, it must display the best-priced quotes submitted to it by the public when the average trading volume in a given stock on it is 5% or more, a requirement that most individual dark pools do not meet or are exempted from. By various accounts, the advent of Reg ATS was a catalyst for the proliferation of dark pools. 2. Reg NMS. Adopted by the SEC in 2005, Reg NMS was intended to improve domestic exchanges through improved price execution, quotes, and investor access to market data. Three key Reg NMS rules are (1) the order protection rule, aimed at ensuring that investors receive the best buy or sell price when their orders are executed by eliminating the ability to have orders "traded through" (i.e., executed at a worse price); (2) the access rule, which required better market center linkages and lower access fees; and (3) the market data rule, which requires market centers to route orders for execution to the market center that shows the best price, the NBBO. Various observers have asserted that Reg NMS contributed to today's fragmented trading marketplace, which includes at least 11 exchanges and about 40 dark pools that compete for business in listed stock trades. HFT firms often exploit those fragmented markets by moving quickly between trading venues. Reg NMS is widely said to have helped advance the pools' expansion by abolishing an earlier rule that protected manually submitted exchange (non-electronic) quotes, thus helping to foster more innovative electronic trading venues, including the dark pools. A 2010 report issued by the International Organization of Securities Commissions (IOSCO), a global association of securities regulators, noted, "While dark pools and dark orders may meet a demand in the market, they may raise regulatory issues that merit examination." Several such potential dark pool regulatory concerns are examined below, some of which are also discussed in the IOSCO report. Some believe that the stock market has become excessively fragmented with a proliferation of trading. This fragmentation has many potential causes, though Reg NMS is frequently cited. Some consider the multiplicity of dark pools to be a symptom rather than a cause. Still, the dark pools are an integral part of this fragmentation, and their opacity arguably exacerbates the potential pitfalls of fragmentation. The multiplicity of pools may also pose special challenges to traders, including the cost and logistical burden of accessing the various venues. Another concern is that the fragmentation affords brokers greater opportunity to route customer orders to venues that best meet the brokers' needs (for example, through rebate payment trade enticements) rather than to those that might ultimately be best for their customers. The fragmented trading landscape does, however, appear to have helped produce some market benefits. Greater competition between trading venues arguably led to reduced transaction costs for traders and trading system technological innovations. Reg ATS requires an exchange to provide fair access to its services. Specifically, the regulation requires an ATS to meet fair access requirements with respect to any particular stock that exceeds a 5% trading volume threshold. Dark pools are generally not subject to this requirement, which means that their liquidity is not made available to the investing public on terms that "are not unfairly discriminatory." Meanwhile, there are concerns that individual dark pools may have been selectively offering different traders dissimilar terms for the right to trade on them or route orders to them. Those concerns may assume added significance when certain traders are denied access to dark pools with substantial trading volume (but still less than 5%) in certain stocks. Some have raised concerns that some HFT firms may be placing orders in the lit markets for the purpose of manipulating securities prices in dark pools. For example, the head of FINRA has said that the regulator is expanding its oversight of dark pools with special focus on whether orders that are submitted to public exchanges are "trying to move prices or encourage sellers that may advance their trading in the dark market." Another regulatory focal point stems from observations that dark pools can be used to facilitate potentially improper trading and that the pools' promise of trader confidentiality could give traders opportunities to conduct such trades. Some cite as a potential illustration of such abuse an insider trading complaint filed by the Department of Justice and the SEC against a former fund manager at SAC Capital Advisors. According to the complaint, the manager's emails demonstrated that allegedly unlawful dark pool trades were "executed quietly and efficiently over a four-day period through algorithms and dark pools and booked into two firm accounts with very limited viewing access." Because dark pools, which collectively account for a significant portion of trades in many stocks, do not publicly disseminate pre-trade data, there is concern that stock prices on the lit venues may not reflect the actual market price, thus impeding the price discovery process. Related to this is the fact that a large proportion of orders executed on dark pools offer either no or limited price discovery; those prices derive from either the midpoint of quoted bid and ask prices on the lit markets or somewhere else between those prices. The potentially detrimental role played by dark pools in overall price discovery is a central public policy concern surrounding the pools. A rejoinder to the notion that dark pools undermine price discovery comes from Tabb, a securities market researcher: "While there is, no doubt, some amount of off exchange volume that would adversely impact price discovery, it does not appear that the market is anywhere near that level. Furthermore, there does not appear to be an upward trend suggesting the market should be concerned. Accordingly, at this point in time the price discovery mechanism does not appear threatened." Most of the empirical examinations of dark pools have focused on the relationship between dark pools and price discovery and market quality. After an SEC review of such studies, SEC Chairwoman Mary Jo White remarked that "the current extent of dark trading can sometimes detract from market overall quality, including the informational efficiency of prices." Research from Hatheway et al. found that the regulatory exemptions possessed by dark pools, including exemptions from compliance with fair (investor) access rules and pre-trade data display rules, enables them to "segregate order flow based on asymmetric information risk, which results in their transactions being less informed and contributing less to price discovery on the consolidated market." On balance, the research concluded that "the effects of order segmentation by dark venues are damaging to overall market quality except for the execution of large [block] transactions." Another study analyzed Canadian dark trading before and after the advent of minimum price improvement rules in October 2012, which generally required dark trading venues to provide price improvements to prevailing lit market quotes before they could execute orders. The research by Foley and Putnins divided trading in dark pools into two types: 1. One-sided trading , which takes place at a single price, such as the midpoint of the national best bid and offer. The trading is also characterized by the fact that at any point in time, dark liquidity can exist only on the buy side or the sell side of a transaction but not both. It is also depicted as having relatively low execution probability, especially for informed traders. The trading also tends to involve the imperfect concealment of trading intentions from rival traders. 2. Two-sided trading , which takes place at different prices on both the buy and sell sides of the market. Compared with one-sided dark trading, traders in a two-sided dark market can immediately execute their orders if there is liquidity on both the buy and the sell sides of a potential trade. Also, in contrast to one-sided trading, these trades tend to provide better concealment of a trader's intentions. The research is potentially significant because it does not treat dark pool trading as homogeneous (as many studies do) but as varied and distinctive. Such differences, the researchers concluded, can manifest themselves through markedly different market impacts: The authors found that two-sided dark trading tends to benefit market liquidity, facilitate pricing, and contribute to informational efficiency in moderate levels of trading. Two-sided dark pool trading was also found to have lowered bid-ask spreads--a key component of overall investor transactions--and reduced the delay with which stock prices reflect market-wide information. On the other hand, the researchers also found that one-sided dark pool trading had a modestly negative impact on a number of measures of market quality. Securities regulators have recently adopted or laid the groundwork for dark-pool-related regulatory regimes. One completed regulatory development is a FINRA-based ATS trading data disclosure regime. A pending initiative will be a pilot project to be overseen by the SEC that will assess a protocol in which off-exchange trading venues, including dark pools, would be able to execute orders only if they could provide a significant price improvement or a significant size improvement. The protocol is known as the "trade-at" rule. These developments are discussed below. In May 2014, FINRA began requiring ATSs, including dark pools, to report their aggregate weekly volume of transactions and number of trades by security, data that FINRA then reports on its website on a delayed basis. In November 2014, FINRA will require ATSs, including dark pools, to employ a unique identifier called a market participation identifier when reporting information. FINRA has said that the rules will, among other things, "enhance FINRA's regulatory and automated surveillance efforts by enabling it to obtain more granular information regarding activity conducted on or through individual ATSs as well as FINRA's ability to determine whether an ATS is subject to any provisions of Regulation ATS that are triggered by exceeding certain trading volume thresholds." On June 24, 2014, the SEC ordered the national stock exchanges, the NASDAQ, and FINRA to establish a yearlong pilot program that would require several hundred lightly traded and more illiquid stocks to trade in five-cent minimum increments rather than the current regime's one-cent convention. Specifically, the pilot will consist of a control group and two test groups with 300 stocks each and will include stocks of companies that have a market capitalization of below $5 billion, an average daily trading volume of 1 million shares, and a share price of at least $2.00. The test group is to be the same as the control group but will allow for certain exceptions to the five-cent trading tick requirement. The second test group will be similar to the first group but will also provide a test of the trade-at rule. The pilot is expected to last several years. Various proponents of a system-wide increase in minimum trading increments have argued that it would help increase the bid-ask spread for trades in relatively illiquid stocks of small companies. They say that this, in turn, should translate into greater broker profits, giving brokers greater incentives to research and promote relatively low-visibility stocks. The SEC has said that the pilot will provide "the means to continue to gather further information and views on the impact of decimalization on the liquidity and trading of the securities of small capitalization companies." Exchange owners, including owners of the NYSE and Nasdaq, have advocated such a trade-at rule. They have seen a migration of significant portions of their trading volume to dark trades. However, brokerage firms as well as the exchange BATS, which is owned by a brokerage firm that owns a dark pool, are reportedly critical of such trade-at rules. On the rationale behind the trade-at rule pilot, the SEC explained, "When quoting and trading increments are widened in the absence of a trade-at requirement, the Commission preliminarily believes there is a possibility trading volume could migrate away from 'lit venues.' ... [Thus the pilot] should test whether a trade-at requirement would stem the potential migration of trading volume away from these lit venues." In 2012 and 2013, Canada and Australia (respectively) instituted system-wide trade-at rules for off-exchange orders, including in dark pools. The rules were aimed in part at reducing the level of smaller-sized off-exchange trades. To be executed, quotes for smaller-sized orders in a given stock on an off-exchange venue such as a dark pool must generally represent a meaningful price improvement over the quotes simultaneously displayed on exchanges. Research by Foley and Putnins, described above, found that Canada's trade-at regulation reduced the level of dark trading but also led to a shift away from two-sided dark trading, which they found tends to benefit market quality, and toward one-sided dark trading, which they found tends to reduce market quality. In June 2014, Mary Jo White asked agency staff to draft recommendations for expanding the scope of the operational disclosures that dark pools and other ATSs might provide to both the SEC and the public. In addition, with a possible eye toward future regulatory actions, White noted that the agency would "continue to examine whether dark trading volume is approaching a level that risks seriously undermining the quality of price discovery provided by lit venues." Regulators and law enforcement authorities have taken a number of enforcement actions against dark pool owners for violations of laws or regulations. This section describes some examples of such actions, including a 2014 civil suit by the New York attorney general against Barclays, one of the largest dark pool operators, and some enforcement actions undertaken by the SEC and FINRA. On June 25, 2014, New York Attorney General Eric Schneiderman filed a civil action with the state supreme court against one of the largest dark pool operators, the U.K.-based financial firm Barclays. The lawsuit charged, under New York state law's Martin Act, that Barclays falsified marketing material related to the extent and type of HFT in its dark pool. Another charge was that the firm falsely claimed that it was able to "restrict" HFT firms from interacting with its other clients but noted that it did not actually monitor such things. Referencing the case, some observers reiterated the fact that institutional investors are often attracted to dark pools because they have offered some protection against their large orders being spotted before they are fully executed. They then noted that if an HFT firm becomes aware of such an institutional stock order early on, the firm could then jump in and acquire the stock ahead of the institutional investor, potentially raising the investor's costs. Speaking about some of the possible implications of the Barclays suit, Justin Schack, Rosenblatt's managing director of market structure analysis, reportedly observed: "The problem isn't that [HFT] firms are participating in dark pools. That's pretty widely known, it's not necessarily bad and it's happening in most of the major ones.... [The troubling allegation is] that the broker lied to clients about the presence of a big HFT firm." In addition, Columbia law professor John C. Coffee Jr. has decried the fact that the people who actually understand the workings of dark pools is probably only in the hundreds. In congressional testimony, White has attempted to assure Congress of the adequacy of the agency's oversight of dark pools. She said that the agency has "taken a data-driven, disciplined approach to addressing complex market structure issues, such as high-frequency trading and dark pools, [and is] implementing a powerful new analytical tool called MIDAS [the Market Information Data Analytics System, a market analysis system that combines advanced technologies with empirical data that is designed to give the SEC added insight into securities markets]." The SEC and FINRA are both involved in probes of dark pools and their owners with respect to possible violations of securities laws. Some observers have noted that "the SEC has proven a willingness to prosecute dark pool operators for various violations, such as failing to provide the kind of anonymity and discretion that traders expect." Regulatory probes may lead to such cases. The SEC reportedly first fined a dark pool owner in 2011. For allegations involving customer misrepresentation, the agency levied a $1 million fine on Pipeline Trading Systems for failing to disclose to Pipeline's "dark pool customers" that an affiliate actually filled most of the customers' orders. The agency's ongoing probe of dark pools reportedly involves the pools' proper disclosure to clients about how they operate, fair treatment of investors, and protection of confidential client information, among other things. Barclays dark pool is reportedly under investigation by the SEC. In the aforementioned June 2014 speech, White indicated that the SEC would continue to examine whether dark trading volume is approaching a level that risks undermining the quality of price discovery provided by public exchanges. She also noted that the agency planned to work with FINRA to possibly expand trading disclosures required of dark pools and other off-exchange trading venues. In 2014, FINRA negotiated a settlement with Goldman Sachs, which had allegedly failed to ensure that clients in SIGMA-X, its dark pool, got the best price while trading stocks. The regulator reportedly charged that SIGMA-X executed nearly 400,000 trades between July 29, 2011, and August 9, 2011, at inferior prices and in violation of investor protection rules. Goldman Sachs agreed to pay $800,000 in fines. Meanwhile, FINRA is reportedly seeking information on various dark pools' operations, including what the pools disclose to clients. Based on the answers it receives, the regulator could bring enforcement actions against dark pool operators or issue recommendations for more stringent oversight of the pools.

The term "dark pools" generally refers to electronic stock trading platforms in which pre-trade bids and offers are not published and price information about the trade is only made public after the trade has been executed. This differs from trading in so-called "lit" venues, such as traditional stock exchanges, which provide pre-trade bids and offers publicly into the consolidated quote stream widely used to price stocks. Dark pools arose partly due to demand from institutional investors seeking to buy or sell big blocks of shares without sparking large price movements. The volume of trading on dark pools has climbed significantly in recent years, from about 4% of overall trading volume in 2008 to about 15% in 2013. While dark pools reportedly have lower trading fees, their lack of price transparency has sparked concerns about the continued accuracy of consolidated stock price information. In addition, fairness concerns have surfaced in recent regulatory and enforcement actions, in the press, and in Michael Lewis's book Flash Boys over allegations that dark pool operators may have facilitated front-running of large institutional investors by high-frequency traders, in exchange for payment, and misrepresented the nature of high-frequency trading in the dark pools. This report examines the confluence of factors that led to the rise of dark pools; the potential benefits and costs of such trading; some regulatory and congressional concerns over dark pools; recent regulatory developments by the Securities and Exchange Commission (SEC) and the Financial Industry Regulatory Authority (FINRA), which oversees broker-dealers; and some recent lawsuits and enforcement actions garnering significant media attention. These include a 2014 civil suit filed by New York Attorney General Eric Schneiderman against the securities firm Barclays for its dark pool operations. A central allegation was that in marketing materials for prospective investors, Barclays misrepresented the extent and nature of the high-frequency trading in its pool. The report also examines steps regulators in Canada and Australia have taken to address any reduction in price transparency from dark pool trading. Traditionally, the exclusive locales for stock trades were exchanges such as the New York Stock Exchange and NASDAQ. In recent decades, the availability of cheaper and more powerful computers and at least two SEC regulations--Regulation ATS and Regulation NMS--helped give rise to an array of alternative trading venues that include dark pools. SEC Chair Mary Jo White and others have voiced concerns that the pools impede the overall process of price discovery in stocks. Proponents of dark pools, however, point out that they have lowered trading costs and that they may afford faster trading or superior technology and enable investors to buy or sell larger blocks of stocks without moving the market. In an effort to increase market transparency, FINRA in 2014 began requiring dark pools to report their aggregate weekly volume of transactions and the number of trades executed in each security. In June 2014, White asked SEC staff to draft recommendations for expanding the scope of operational disclosures that dark pools would have to provide to the SEC and the public. The SEC also announced a pilot project dubbed the "trade-at" rule, in which off-exchange trading venues, including dark pools, could execute orders only if they provided a significant price improvement or size improvement over "lit" venues. Both Canada and Australia saw significant reductions in dark pool trades after adopting such trade-at rules. Critics of the trade at rule include brokerage firms, some of whom own dark pools. Congress has examined regulatory concerns over dark pools in a number of 2014 hearings on high-frequency trading as part of its oversight over the SEC.

T he Patient Protection and Affordable Care Act (ACA; P.L. 111-148 , as amended) includes reforms of the health insurance market that impose requirements on private health insurance plans. Such reforms relate to the offer, issuance, generosity, and pricing of health plans, among other issues. Certain reforms also require the participation of public agencies and officials, such as the Secretary of Health and Human Services (HHS), to facilitate administrative or operational elements of the insurance market. This report first provides background information about the private health insurance market. It then describes the market reforms included in the ACA. The Appendix provides additional information about how the ACA market reforms apply to different market segments and types of health plans. The private health insurance market is often characterized as having three segments--the large-group, small-group, and individual markets. Insurance sold in the large- and small-group markets refers to plans offered through a plan sponsor, typically an employer. A small employer is defined as one with 50 or fewer employees, but states may elect to define a small employer as one with 100 or fewer employees. The individual, or non-group, market refers to insurance policies offered to individuals and families buying insurance on their own (i.e., not through a plan sponsor). States are the primary regulators of the business of health insurance, as codified by the 1945 McCarran-Ferguson Act. Each state has a unique set of rules that apply to state-licensed insurance carriers and the plans they offer. These rules are broad in scope and address a variety of issues, such as the legal structure and organization of insurance issuers (e.g., licensing requirements); business practices (e.g., marketing rules); market conduct (e.g., capital and reserve standards); the nature of insurance products (e.g., benefit mandates); and consumer protections (e.g., plan disclosure requirements), among others. In addition to state regulation, the federal government has established standards applicable to health coverage and imposes requirements on state-licensed insurance carriers and sponsors of health benefits (e.g., employers). The federal regulation of health coverage is particularly salient with respect to health benefits provided through employment. The ACA follows the model of federalism that has been employed in prior federal health insurance reform efforts (e.g., Health Insurance Portability and Accountability Act of 1996, P.L. 104-191 ). In other words, although the ACA establishes many federal rules, the states have primary responsibility for monitoring both compliance with and enforcement of such rules. In addition, states may impose additional requirements on insurance carriers and the health plans they offer, provided that the state requirements neither conflict with federal law nor prevent the implementation of federal market reforms. The ACA establishes federal requirements that apply to private health insurance. The reforms affect insurance offered to groups and individuals; impose requirements on sponsors of coverage; and, collectively, establish a federal floor with respect to access to coverage, premiums, benefits, cost sharing, and consumer protections. Although such market reforms may be new at the federal level, many of the ACA's reforms had already been enacted in some form in several states, with great variation in scope and specificity across the states. In general, all ACA market reforms are currently effective. (See the text box, "Transitional Policy," for a discussion about why some plans may not have to comply with applicable ACA market reforms until 2017.) The reforms do not apply uniformly to all types of plans. Often, reforms apply differently to health plans according to the market segment in which the plan is offered and whether the plan has grandfathered status. Furthermore, the reforms do not apply to certain types of plans (this is true of other federal health reforms as well). For example, retiree-only health plans are not required to comply with federal health insurance requirements, including the ACA's market reforms. For information as to the specific types of plans (i.e., a grandfathered plan in the large-group market) to which a reform applies, see the Appendix . Descriptions of the market reforms are grouped under the following categories: obtaining coverage, keeping coverage, cost of purchasing coverage, covered services, cost-sharing limits, consumer assistance and other health care protections, and plan requirements related to health care providers. Certain types of coverage must be offered on a guaranteed-issue basis. In general, guaranteed issue in health insurance is the requirement that a plan accept every applicant for health coverage, as long as the applicant agrees to the terms and conditions of the insurance offer (e.g., the premium). With regard to plans offered in the group market, guaranteed issue generally means that a plan sponsor (e.g., an employer) must be able to purchase a group health plan any time during a year. Individual plans are allowed to restrict enrollment to open and special enrollment periods. Plans that otherwise would be required to offer coverage on a guaranteed-issue basis are allowed to deny coverage to individuals and employers in certain circumstances. Those circumstances include when a plan demonstrates that it does not have the network capacity to deliver services to additional enrollees or the financial capacity to offer additional coverage. Plans are prohibited from basing eligibility or coverage on health status-related factors. Such factors include health status, medical condition (including both physical and mental illness), claims experience, receipt of health care, medical history, genetic information, evidence of insurability (including conditions arising out of acts of domestic violence), disability, and any other health status-related factor determined appropriate by the HHS Secretary. However, plans may offer premium discounts or rewards based on enrollee participation in wellness programs, in keeping with prior federal law. If a plan offers dependent coverage, the plan must make such coverage available to a child under the age of 26. Plans that offer dependent coverage must make coverage available for both married and unmarried adult children under the age of 26 but not for the adult child's children or spouse (although a plan may voluntarily choose to cover these individuals). The sponsors of health plans (e.g., employers) are prohibited from establishing eligibility criteria for any full-time employee that are based on the employee's total hourly or annual salary. Eligibility rules are not permitted to discriminate in favor of higher-wage employees. The Departments of HHS, Labor, and the Treasury have determined that compliance with this requirement is not required until after regulations are issued. As of the date of this report, regulations have not been issued. Plans are prohibited from establishing waiting periods longer than 90 days. A waiting period refers to the time that must pass before coverage for an individual who is eligible to enroll under the terms of the plan can become effective. In general, if an individual can elect coverage that becomes effective within 90 days, the plan complies with this provision. Guaranteed renewability in health insurance is a plan's requirement to renew individual coverage at the option of the policyholder or to renew group coverage at the option of the plan sponsor. Most plans offered in the individual and small-group markets must renew coverage at the option of the enrollee or plan sponsor; however, plans may discontinue coverage under certain circumstances. For example, a plan may discontinue coverage if the individual or plan sponsor fails to pay premiums or if an individual or plan sponsor performs an act that constitutes fraud in connection with the coverage. The practice of rescission refers to the retroactive cancellation of medical coverage after an enrollee has become sick or injured. In general, rescissions are prohibited, but they are permitted in cases where the covered individual committed fraud or made an intentional misrepresentation of material fact as prohibited by the terms of the plan. A cancellation of coverage in this case requires that a plan provide at least 30 calendar days advance notice to the enrollee. Plans must use adjusted (or modified) community rating rules to determine premiums. Adjusted community rating rules prohibit plans from pricing health insurance products based on health factors but allow plans to price products based on other key characteristics, such as age. The rating rules restrict premium variation to the four factors described below. Self- O nly or F amily E nrollment. In most states, plans can vary premiums based on whether an individual or an individual and any number of his/her dependents enroll in the plan. However, under certain circumstances, the state is allowed to require that premiums for family coverage are determined using state-established uniform family tiers. For example, such a state may allow plans to vary premiums based on self-only coverage, self plus one coverage, and family coverage. Geographic R ating A rea. States are allowed to establish one or more geographic rating areas within the state for the purposes of this provision. The rating areas must be based on one of the following geographic boundaries: (1) counties, (2) three-digit zip codes, or (3) metropolitan statistical areas (MSAs) and non-MSAs. If a state does not establish rating areas or if the Centers for Medicare & Medicaid Services (CMS) determines that a state's proposed rating areas are inadequate, then the default is one rating area for each MSA in the state and one rating area comprising all non-MSAs in the state. Tobacco U se. Plans are allowed to charge a tobacco user up to 1.5 times the premium that they charge an individual who does not use tobacco. Age. Plans can vary premiums by no more than a 3-to-1 ratio for adults aged 21 and older. This provision means that a plan may not charge an older individual more than three times the premium that the plan charges a 21-year-old individual. Each state must use a uniform age rating curve to specify the rates across all adult age bands, and each state must set a separate rate for all individuals aged 20 and younger. HHS created an age curve that states may choose to use, but some states have implemented standards other than the federal defaults. The rate review program aims to ensure that proposed annual health insurance rate increases in the small-group and individual markets that meet or exceed a specified threshold are reviewed by a state or CMS to determine whether they are unreasonable. States have the option to establish state-specific thresholds, and a 10% threshold is in effect in any states that do not establish state-specific thresholds. Plans subject to review are required to submit to CMS and the relevant state a justification for the proposed rate increase prior to its implementation, and CMS will publicly disclose the information. The rate review process does not establish federal authority to deny implementation of a proposed rate increase; it is a sunshine provision designed to publicly expose rate increases determined to be unreasonable. A risk pool is used to develop rates for coverage. A health insurance issuer must consider all enrollees in plans offered by the issuer to be members of a single risk pool. More specifically, an issuer must consider all enrollees in individual plans offered by the issuer to be members of a single risk pool; the issuer must have a separate risk pool for all enrollees in small-group plans offered by the issuer. (However, states have the option to merge their individual and small-group markets; if a state does so, an issuer will have a single risk pool for all enrollees in its individual and small-group plans.) A result of the single risk pool requirement is that issuers must consider the medical claims experience of enrollees in all plans (individual and small-group, either separately or combined) offered by the issuer when developing rates. Plans must cover the essential health benefits (EHB). The ACA does not explicitly list the benefits that comprise the EHB; rather, it lists 10 broad categories from which benefits and services must be included. The HHS Secretary is tasked with further defining the EHB. For 2014 through 2016, the Secretary asked each state to select a benchmark plan from four different types of plans. If the selected benchmark plan does not cover services and benefits from all 10 categories listed in statute, the state must supplement the benchmark plan (according to a process outlined by HHS) to ensure that all 10 statutorily required categories are represented. In general, plans that are required to offer the EHB must model their benefits package after the state's selected benchmark plan. The EHB requirement does not prohibit states from maintaining or establishing state-mandated benefits. In fact, state-required benefits enacted on or before December 31, 2011, are considered part of the EHB for 2014 through 2016. However, any state that requires plans to cover benefits beyond the EHB and what was mandated by state law prior to 2012 must assume the total cost of providing those additional benefits. In other words, states must defray the cost of any mandated benefits enacted after December 31, 2011. Plans are generally required to provide coverage for certain preventive health services without imposing cost sharing. The preventive services include the following minimum requirements: evidence-based items or services that have in effect a rating of "A" or "B" from the United States Preventive Services Task Force (USPSTF); immunizations that have in effect a recommendation for routine use from the Advisory Committee on Immunization Practices (ACIP) of the Centers for Disease Control and Prevention (CDC); evidence-informed preventive care and screenings (for infants, children, and adolescents) provided for in the comprehensive guidelines supported by the Health Resources and Services Administration (HRSA); and additional preventive care and screenings for women not described by the USPSTF, as provided in comprehensive guidelines supported by HRSA. Additional services not recommended by the USPSTF may be offered but are not required. For the purposes of this provision and others in federal law, the ACA negated the November 2009 USPSTF recommendation that women receive routine screening mammograms to detect breast cancer beginning at the age of 50. Plans have instead been required to cover screening mammograms beginning at the age of 40, based on the prior (2002) USPSTF recommendation. The USPSTF published a draft revision in April 2015 that reiterated the recommendation in January 2016. In the interim, Congress included a provision in FY2016 Omnibus appropriations clarifying that for the purposes of any law that references USPSTF recommendations, the mammography screening recommendation from 2002 shall be used, though January 1, 2018. As a result, for 2016 and 2017, the coverage requirement continues to apply for women beginning at age 40. A plan with a network of providers is not required to provide coverage for an otherwise required preventive service if it is delivered by an out-of-network provider, and the plan may impose cost-sharing requirements for a recommended preventive service delivered out of network. Additionally, if a recommended preventive service does not specify the frequency, method, treatment, or setting for the service, then the plan can determine coverage limitations by relying on established techniques and relevant evidence. The ACA prohibits plans from excluding coverage for preexisting health conditions. In other words, plans may not exclude benefits based on health conditions for any individual. A preexisting health condition is a medical condition that was present before the date of enrollment for health coverage, whether or not any medical advice, diagnosis, care, or treatment was recommended or received before such date. Plans must comply with annual limits on out-of-pocket spending. The limits apply only to in-network coverage of the EHB. In 2016, the limits cannot exceed $6,850 for self-only coverage and $13,700 for coverage other than self only. The self-only limit applies to each individual, regardless of whether the individual is enrolled in self-only coverage or coverage other than self only. For instance, if an individual is enrolled in a family plan and incurs $8,000 in cost sharing, the plan is responsible for covering the individual's costs above $6,850. Plans must tailor cost sharing to comply with one of four levels of actuarial value. Actuarial value (AV) is a summary measure of a plan's generosity, expressed as the percentage of total medical expenses that are estimated to be paid by the issuer for a standard population and set of allowed charges. In other words, AV reflects the relative share of cost sharing that may be imposed. On average, the lower the AV, the greater the cost sharing for enrollees overall. Each level of plan generosity is designated according to a precious metal and corresponds to an actuarial value: Bronze: 60% AV Silver: 70% AV Gold: 80% AV Platinum: 90% AV Prior to the ACA, plans were generally able to set lifetime and annual limits--dollar limits on how much the plan would spend for covered health benefits either during the entire period an individual was enrolled in the plan (lifetime limits) or during a plan year (annual limits). Under the ACA, both lifetime and annual limits are prohibited; the limits apply specifically to the EHB. Plans are permitted to place lifetime and annual limits on covered benefits that are not considered EHBs, to the extent that such limits are otherwise permitted by federal and state law. The HHS Secretary, in consultation with the states, is required to establish an Internet portal for the public to easily access affordable and comprehensive coverage options. The portal is required to provide, at minimum, information on the following coverage options: health plans offered in the private insurance market, Medicaid and the State Children's Health Insurance Program (CHIP), high-risk pools, and small-group health plans. The Internet portal, www.healthcare.gov , launched on July 1, 2010. Plans are required to provide a summary of benefits and coverage (SBC) to individuals at the time of application, prior to the time of enrollment or reenrollment, and when the insurance policy is issued. The SBC must meet certain requirements, as specified in statute and further developed by the Secretaries of HHS, Labor, and the Treasury. The statutory requirements for the SBC are summarized in Table 1 . The SBC may be provided in paper or electronic form. Enrollees must be given notice of any material changes in benefits no later than 60 days prior to the date that the modifications would become effective. Plans also must provide a uniform glossary of terms commonly used in health insurance coverage (e.g., coinsurance) to enrollees upon request. Health plans are required to submit to the HHS Secretary a report concerning the percentage of premium revenue spent on medical claims ( medical loss ratio , or MLR). The MLR calculation includes adjustments for health quality costs, taxes, regulatory fees, and other factors. The law requires plans in the individual and small-group markets to meet a minimum MLR of 80%; for large groups, the minimum MLR is 85%. States are permitted to increase the percentages, and the HHS Secretary may adjust the state percentage for the individual market if HHS determines that the application of a minimum MLR of 80% would destabilize the individual market within the state. Health plans whose MLR falls below the specified limit must provide rebates to policyholders on a pro rata basis. Any required rebates must be paid to policyholders by August of that year. The ACA requires that plans implement an effective appeals process for coverage determinations and claims. At a minimum, the plans must have an internal claims appeals process; provide notice to enrollees regarding available internal and external appeals processes and the availability of any applicable assistance; and allow an enrollee to review his or her file, present evidence and testimony, and receive continued coverage pending the outcome. To comply with the requirements for the internal claims appeals process, group plans are expected to initially incorporate the claims and appeals procedures previously established under federal law and to update their processes in accordance with any standards established by the Secretary of Labor. Individual health plans must comply with internal claims and appeals procedures set forth under applicable law and updated by the Secretary of HHS. To comply with the requirements for the external appeals process, plans must comply with a state's external review process, provided that process includes, at a minimum, the consumer protections set forth in the Uniform External Review Model Act promulgated by the National Association of Insurance Commissioners. If a state's review process does not meet the minimum requirements, the state must implement a process that meets the standards established by the HHS Secretary and plans must comply with such a process. Plans are subject to three requirements relating to the choice of health care professionals. 1. A plan that requires or allows an enrollee to designate a participating primary care provider is required to permit the designation of any participating primary care provider who is available to accept the individual. 2. This same provision applies to pediatric care for any child who is a plan participant. 3. A plan that provides coverage for obstetrical or gynecological care cannot require authorization or referral by the plan or any person (including a primary care provider) for a female enrollee who seeks obstetrical or gynecological care from an in-network health care professional who specializes in obstetrics or gynecology. Plans also must comply with one requirement relating to benefits for emergency services. If the plan covers services in an emergency department of a hospital, the plan is required to cover those services without the need for any prior authorization and without the imposition of coverage limitations, irrespective of the provider's contractual status with the plan. If the emergency services are provided out of network, the cost-sharing requirement will be the same as the cost sharing for an in-network provider. Health plans cannot prohibit qualified individuals from participating in an approved clinical trial; deny, limit, or place conditions on the coverage of routine patient costs associated with participation in an approved clinical trial; or discriminate against qualified individuals on the basis of their participation in approved clinical trials. Plans are not allowed to discriminate, with respect to participation under the plan, against any health care provider who is acting within the scope of that provider's license or certification under applicable state law. This provision does not require that a plan contract with any health care provider willing to abide by the plan's terms and conditions, and the provision cannot be read as preventing a plan or the HHS Secretary from establishing varying reimbursement rates for providers based on quality or performance measures. Beginning upon the ACA's enactment and concluding no later than two years after enactment, the HHS Secretary must develop quality reporting requirements for use by specified plans. The Secretary must develop these requirements in consultation with experts in health care quality and other stakeholders. The Secretary is also required to publish regulations governing acceptable provider reimbursement structures not later than two years after ACA enactment. Not later than 180 days after these regulations are promulgated, the U.S. Government Accountability Office (GAO) is required to conduct a study regarding the impact of these activities on the quality and cost of health care. To date, the Secretary has not published the required regulations; therefore, the required GAO report has not been published. Once the reporting requirements are implemented, plans will annually submit, to the Secretary and enrollees, a report addressing whether plan benefits and reimbursement structures do the following: improve health outcomes through the use of quality reporting, case management, care coordination, and chronic disease management; implement activities to prevent hospital readmissions and to improve patient safety and reduce medical errors; and implement wellness and health promotion activities. The Secretary is required to make these reports available to the public and is permitted to impose penalties for noncompliance. Wellness and health promotion activities include personalized wellness and prevention services, specifically efforts related to smoking cessation, weight management, stress management, physical fitness, nutrition, heart disease prevention, healthy lifestyle support, and diabetes prevention. These services may be made available by entities (e.g., health care providers) that conduct health risk assessments or provide ongoing face-to-face, telephonic, or web-based intervention efforts for program participants.

The Patient Protection and Affordable Care Act (ACA; P.L. 111-148, as amended) establishes federal requirements that apply to private health insurance. Its market reforms affect insurance offered to groups and individuals and impose requirements on sponsors of coverage (e.g., employers). In general, all of the ACA's market reforms are currently effective; some became effective shortly after the ACA was passed in 2010, and others became effective for plan years beginning in 2014. Although some of the market reforms had previously been enacted in some states, many of the reforms are new at the federal level. Collectively, the reforms create federal minimum requirements with respect to access to coverage, premiums, benefits, cost sharing, and consumer protections. For example, the requirement to offer health plans on a guaranteed-issue basis generally means that insurers must accept every applicant for health coverage, as long as the applicant agrees to the terms and conditions of the coverage (e.g., the premium). The ACA's requirement to offer the essential health benefits means that certain plans must cover a specified package of benefits. The market reforms do not apply uniformly to all types of plans. Some reforms apply to all three segments of the private insurance market--individual, small group, and large group--whereas others may apply only to plans offered in the individual and small-group markets. In the group market, the reforms do not always apply to both fully insured plans (plans offered by state-licensed carriers that are purchased by employers or other sponsors) and self-insured entities (groups that set aside funds to pay for health benefits directly). The reforms' applicability also depends on whether a plan has grandfathered status. Under the ACA, an existing health plan in which a person was enrolled on the date of ACA enactment was grandfathered; the plan can maintain its grandfathered status as long as it meets certain requirements. Grandfathered health plans are exempt from the majority of ACA market reforms. Although the market reforms' applicability is not necessarily uniform across plan types, it is uniform for plans offered inside and outside health insurance exchanges. Every state has an exchange, and individuals and small employers can use the exchanges to shop for and obtain health insurance coverage. The same market reforms apply to an individual plan offered through an exchange and to an individual plan offered in the market outside of an exchange. Some types of plans do not have to comply with any of the market reforms. For example, retiree-only health plans are not required to comply with federal health insurance requirements, including the ACA's market reforms. This report provides background information about the private health insurance market, including market segments and regulation. It then describes each ACA market reform. The reforms are grouped under the following categories: obtaining coverage, keeping coverage, cost of purchasing coverage, covered services, cost-sharing limits, consumer assistance and other health care protections, and plan requirements related to health care providers. The Appendix provides details about the types of plans that are required to comply with the different reforms.

Short selling was best described by Daniel Drew, the Gilded Age speculator and robber baron: "He that sells what isn't his'n, must buy it back or go to prison." Short sellers borrow shares from a broker, sell them, and make a profit if the share price subsequently drops, allowing them to buy back the same number of shares for less money. In other words, short selling is a bet that the price of a stock will fall. Short sellers have always been unpopular on Wall Street. Like skeletons at the feast, they seem to stand against rising share values, expanding wealth, and national prosperity. However, most market participants recognize that they provide a valuable service to the extent that they identify companies and industries that are overvalued by investors in the grip of irrational exuberance. They may also provide a curb against manipulators who spread false news or otherwise attempt to artificially boost a stock price. By bringing such valuations down to earth, short selling can prevent economically wasteful over-allocation of resources to firms and sectors. Another persistent complaint against short sellers is that they cause artificial price volatility. A form of manipulation common in the 19 th century was the "bear raid"--a gang of speculators would sell a stock short, causing the price to drop. They would follow with another wave of short sales, depressing the price still further, and so on, until the stock's price was driven to the floor. In the 1930s, the Securities and Exchange Commission (SEC) adopted a regulation to prevent bear raiding. The "uptick rule" stated that a short sale may occur only if the last price movement in a stock's price was upward. This prevents short sellers from piling onto a falling stock and setting off a downward price spiral. In the words of a standard securities law textbook, the tick test (and related rules) "seem pretty well to have taken the caffeine out of the short sale." In 2007, the SEC concluded that growth in the market made the rule unnecessary, and it was repealed. However, in recent years, complaints about manipulative short selling have reappeared. Many shareholders and officers of smaller firms have identified "naked" short selling as a source of price manipulation and have criticized the SEC's enforcement record. At the same time, the SEC has identified short selling in connection with spreading rumors as an abuse that may raise fears about the solvency of the target firm and cut off its access to credit, potentially leading to the destruction of the firm, as was the case with Bear Stearns in March 2008. A short sale always involves the sale of shares that the seller does not own. The buyer, however, expects to receive real shares. Where do those shares come from? Normally, they are borrowed by the broker from another investor or from a brokerage's own account. This is usually not difficult to do if the shares are issued by a large company, where millions of shares change hands daily and where many shares are not registered to the actual owners, but are held in "street name," that is, in the broker's account. With smaller corporations, however, the number of shares in circulation may be limited, and brokers may find it difficult to locate shares to deliver to the buyer in a short sale transaction. When shares are not located to "cover" a short sale, the short position is said to be naked. If shares are not found by the time the transaction must be settled, there is a "failure to deliver" shares to the buyer. If it occurs sporadically and on a small scale, naked short selling does not raise serious manipulation concerns. However, when the number of shares sold short represents a significant fraction of all shares outstanding, there may be a strong impact on the share price. In such cases, when naked short selling creates a virtually unlimited quantity of shares, a market based on supply and demand can be seriously distorted. The SEC notes that "naked short sellers enjoy greater leverage than if they were required to borrow securities and deliver within a reasonable time period, and they may use this additional leverage to engage in trading activities that deliberately depress the price of a security." Opponents of naked short selling also charge that by permitting short sales to occur when there is no possibility of actually delivering shares to the buyers, brokers and dealers accommodate manipulation. When naked short selling drives prices down, holders of the stock understandably feel cheated. They do not believe the stock is overvalued; they are not selling; but the price drops anyway. It is important to note that naked short selling is not always evidence of intent to manipulate prices. Under certain circumstances, a market maker may engage in naked short selling to stabilize the market. For example, assume that there is a sudden flurry of buy orders for a stock. The market maker may judge the buying interest to be temporary and not justified by any real news about the company's prospects. It may be the result of a questionable press release or a rumor in an Internet chat room. The market maker may choose to sell short to avoid what in its view would be an unjustified run-up in the stock's price. In this situation, naked short selling by the market maker may protect investors against manipulation. It is also worth noting that while restrictions on short selling discourage certain forms of manipulation, they may encourage or facilitate others. Manipulations that involve artificially inflating stock prices are probably more common than techniques (like naked shorting) that seek to depress them. Rumors, false press releases, and unexpected purchases may all cause sudden run-ups of stock prices, which may be followed (in the classic "pump-and-dump" fraud) by sudden collapse, as the manipulators sell their shares to the unwary. Without short selling as a counterweight, the magnitude and duration of such fraudulent run-ups are likely to be greater Until July 2008, the SEC viewed the problem of naked shorting as largely confined to smaller firms, particularly small-capitalization "penny" stocks listed on the Nasdaq bulletin board market (OTCBB). In these companies, the bulk of outstanding shares may be owned by corporate insiders or by securities dealers who act as market makers, so that relatively few shares are available for purchase on the open market. This means that transactions have a proportionately greater impact on the stock price than do trades of the same size in the shares of a larger company, making manipulation easier. In addition to OTCBB stocks, however, smaller companies listed on the exchanges or the Nasdaq national market were also seen as vulnerable to short selling abuse. After several years of deliberation, the SEC in 2004 adopted rules designed to control abusive naked short selling. Regulation SHO took effect on January 3, 2005. The new regulation replaced existing exchange and Nasdaq rules with a uniform national standard. Under Regulation SHO, a broker may not accept a short sale order from a customer, or effect a short sale for its own account, unless it has either borrowed the security, or made a bona fide arrangement to borrow it; or has reasonable grounds to believe that it can locate the security, borrow it, and deliver it to the buyer by the date delivery is due; and has documented compliance with the above. The appearance of a stock on an exchange's "easy to borrow" list constituted reasonable grounds for believing that the stock can be located. Stocks on such lists tend to be highly capitalized, with large numbers of shares in circulation. If a broker executes a short sale, and then fails to deliver shares to the purchaser, further restrictions on short selling may come into force. If the "fail to deliver" position is 10,000 shares or more, for five consecutive trading days, and the position amounts to at least 0.5% of total shares outstanding, the stock becomes a threshold security . The exchanges and Nasdaq are now required to publish daily lists of threshold securities. Regulation SHO specifies that if a fail to deliver position in a threshold security persists for 13 trading days, the broker (or the broker's clearing house) must close the short position by purchasing securities of like kind and quantity. After the 13 days have elapsed, the broker may not accept any more short sale orders until the fail to deliver position is closed by purchasing securities. The rules include exemptions for market makers engaged in bona fide market-making activities, and for certain transactions between brokers. The adoption of Regulation SHO did not put an end to investor complaints about naked short selling. Complaints were heard that the SEC did not enforce the rules vigorously enough and that some brokers evaded the 13-day requirement by passing fail-to-deliver positions from one firm to another. The SEC staff has monitored the incidence of fail to delivers after the effective date of Regulation SHO, and, in July 2006, Chairman Cox reported that the rule "appears to be significantly reducing fails to deliver without disruption to the markets." Nevertheless, some further amendments to Regulation SHO were considered. In July 2006, the SEC proposed rules to close two "loopholes" in Regulation SHO, which it called responsible for the persistence of fail to deliver positions in certain stocks. Under the proposed rules, the current exemption for options market makers would be restricted. Second, a "grandfather" provision in the original rule--which exempted short positions that had been established before a stock was placed on the threshold securities list from the requirement that fail to deliver positions be closed out after 13 consecutive trading days--would be eliminated. In August 2007, the SEC adopted the proposed rule abolishing the grandfather provision. When a stock goes onto the threshold list, all short positions in the stock will be subject to the 13-day close-out requirement. The SEC did not adopt the proposal relating to options market makers. As financial companies came under pressure from tight credit markets in late 2007 and 2008, concerns emerged about manipulative short sellers spreading rumors about firms' creditworthiness and liquidity. Despite regulators' assurances that Bear Stearns, a leading investment bank, had adequate capital and liquidity reserves, the firm was destroyed in March 2008 by the equivalent of a bank run: market participants, fearing that the firm might not be able to meet its obligations, refused to extend credit on any terms. The Federal Reserve was forced to arrange a hasty merger with JP Morgan Chase, which acquired Bear Stearns on condition that the Fed purchase $29 billion of risky mortgage assets. All large financial firms finance their operations by issuing short-term debt, which must be continually refinanced, or rolled over. Thus, they are vulnerable to "nonbank runs"--they cannot survive long if markets lose confidence and become unwilling to provide new funds. In July 2008, share prices of Fannie Mae and Freddie Mac, the two giant government-sponsored enterprises that hold about $1.5 trillion in mortgage-backed assets, plunged, and fears arose that they might go the way of Bear Stearns. On July 15, the SEC issued an emergency order banning naked short sales of the shares of Fannie, Freddie, and 17 other large financial institutions. Under the terms of the order, no short sale of the stock of any of the 19 listed firms may occur unless the seller has actually borrowed (or arranged to borrow) the stock and delivers the stock to the buyer on the regular settlement date. The SEC explained the rationale for its unusual action: False rumors can lead to a loss of confidence in our markets. Such loss of confidence can lead to panic selling, which may be further exacerbated by "naked" short selling. As a result, the prices of securities may artificially and unnecessarily decline well below the price level that would have resulted from the normal price discovery process. If significant financial institutions are involved, this chain of events can threaten disruption of our markets. The events preceding the sale of The Bear Stearns Companies Inc. are illustrative of the market impact of rumors. During the week of March 10, 2008, rumors spread about liquidity problems at Bear Stearns, which eroded investor confidence in the firm. As Bear Stearns' stock price fell, its counterparties became concerned, and a crisis of confidence occurred late in the week. In particular, counterparties to Bear Stearns were unwilling to make secured funding available to Bear Stearns on customary terms. In light of the potentially systemic consequences of a failure of Bear Stearns, the Federal Reserve took emergency action. The SEC's intervention has been criticized by some who believe that financial stocks had been battered not by false rumors, but by realistic assessments of firms' underlying financial weakness. Short selling, in this view, is simply market discipline at work. One view is that the SEC's objective of raising financial stock prices itself amounts to market manipulation. The SEC's original order, issued on July 15, was extended through August 12, 2008. On September 18, 2008, as financial stocks continued to plunge, the SEC issued another, much more sweeping emergency order. All short selling (naked or not) of the shares of more than 700 financial firms was banned. The rationale was the same as for the earlier action: whatever benefits short selling might provide in terms of price efficiency were far outweighed by the possible damage to the financial system and the economy if major firms were swept away by panic. The emergency order expired October 8, 2008. On October 1, 2008, in addition to extending the short sale ban announced on September 18, the SEC adopted a "interim final" rule that in effect banned naked short selling in all stocks. This order, in the form of an interim final rule, requires that when a failure to deliver shares within the normal three-day settlement period occurs, the seller's broker must immediately purchase or borrow securities and close out the fail to deliver position by no later than the beginning of trading on the next business day. Failure to comply means that the broker cannot sell that stock short either for its own account or for customers, unless the shares are not only located but also pre-borrowed. Failure to deliver shares also exposes brokers to fines and other sanctions. The SEC also adopted Rule 10b-21, a naked short selling anti-fraud rule, covering short sellers who deceive broker-dealers or any other market participants about their intention or ability to deliver securities in time for settlement. The rule makes clear that such persons are violating the law when they fail to deliver. On July 27, 2009, the SEC made the interim rule permanent. In addition, the SEC announced that it was working with the stock markets to improve disclosure about short selling. Information on the amount of short selling of individual stock will be made public on a daily basis. After one month, details of specific short trades will be made public, but without identifying the individual short sellers.

Short sellers borrow stock, sell it, and hope to profit if they can buy back the same number of shares later at a lower price. A short sale is a bet that a stock's price will fall. A short sale is said to be "naked" if the broker does not in fact borrow shares to deliver to the buyer. When executed on a large scale, naked short sales can constitute a large portion of total shares outstanding, and can put serious downward pressure on a stock's price. Critics of the practice characterize it as a form of illegal price manipulation. The Securities and Exchange Commission (SEC) in 2004 adopted Regulation SHO, a set of rules designed to control short selling abuses, focusing on small-capitalization stocks where the number of shares held by the public was relatively small. Until the current financial crisis, the SEC did not view short selling of large, blue-chip stocks as a problem. In July 2008, however, the SEC temporarily banned naked short sales of the stock of Fannie Mae, Freddie Mac, and 17 other large financial institutions. On September 18, 2008, the SEC banned all short selling of the shares of more than 700 financial companies in an emergency action that expired on October 8, 2008. On October 1, 2008, the SEC adopted an interim rule requiring short sellers' brokers to actually borrow shares to deliver to buyers, within one day after the expiration the normal three-day settlement time frame. The rule was made permanent on July 27, 2009, and it applies to all stocks. This report will be updated as events warrant.

When an individual attempts to sue a state under federal law, an argument can be raised bythe state that it is immune to such a suit under the doctrine of sovereign immunity. The starting pointfor such a discussion is usually the Eleventh Amendment, which provides that "The Judicial powerof the United States shall not be construed to extend to any suit in law or equity, commenced orprosecuted against one of the United States by Citizens of another State." The actual text of theAmendment appears to be limited to preventing citizens from bringing diversity cases against statesin federal courts. However, the Supreme Court has expanded the concept of state sovereignimmunity to reach much further than the text of the Amendment. The Eleventh Amendment was passed as a response to the case of Chisholm v. Georgia , (5) which allowed a private citizenof one state to sue another state in federal court without that state's consent. (6) Almost immediately after thedecision in Chisholm , resolutions were introduced in Congress to overturn it, the end result beingthe Eleventh Amendment. (7) The Amendment assured that a citizen of one state could not sueanother state in federal court -- in other words, a citizen could not sue under federal diversityjurisdiction without a state's permission. In Hans v. Louisiana , the Court provided for an even more expansive interpretation of theEleventh Amendment (8) which banned suits by citizens against states regardless of whether or not the citizen was a residentof another state. (9) Latercases established that Congress could not generally abrogate this immunity under its Article Ilegislative powers. (10) The Supreme Court has held, however, that Congress can abrogate state sovereignty under the SS5of the Fourteenth Amendment, which authorized Congress to pass laws to enforce the protectionsof that Amendment. (11) While the logic behind this distinction is unclear, (12) it means that in many cases litigants suing states will have to finda Fourteenth Amendment basis for federal legislation in order to defeat an Eleventh Amendmentdefense. Recent Supreme Court cases, however, make it more difficult for a court to find that theFourteenth Amendment is the constitutional basis for legislation. In the case of Flores v. City ofBoerne, (13) the Courtstruck down the Religious Freedom Restoration Act (RFRA) as beyond the authority of Congressunder SS5 of the Fourteenth Amendment. The case arose when the City of Boerne denied a churcha building permit to expand, because the church was in a designated historical district. The churchchallenged the zoning decision under RFRA. The Supreme Court reiterated that SS5 of theFourteenth Amendment gave the Congress the power to enforce existing constitutional protections,but found that this did not automatically include the power to pass any legislation to protect theserights. Instead, the Court held that there must be a "congruence and proportionality" between theinjury to be remedied and the law adopted to that end. (14) Based on the City of Boerne test, the Court has struck down a variety of laws which weredesigned to deal with the issue of discrimination. For instance, in Kimel v. Florida Board ofRegents , (15) the Courtevaluated whether the Age Discrimination in Employment Act of 1967 was a valid exercise ofCongress's commerce power and SS5 power, and thus could be applied against the states. The Kimel Court held, however, that age is not a suspect class, and that the provisions of the ADEA farsurpassed the kind of protections that would be afforded such a class under the FourteenthAmendment. Further, the Court found, based on City of Boerne , that an analysis of the Congress's abilityto legislate prophylactically under section SS5 required an examination of the legislative record todetermine whether the remedies provided were proportional and congruent to the problem. A reviewby the Court of the ADEA legislative record found no evidence of a pattern of state governmentsunconstitutionally discriminating against employees on the basis of age. Consequently, the Courtheld that a state could not be liable for damages under the ADEA. The application of the Americans with Disabilities Act (ADA) to states was also consideredin the case of the Board of Trustees v. Garrett , (16) with similar result. In Garrett , the Court evaluated whether twoplaintiffs could bring claims for money damages against a state university for failing to makereasonable accommodations for their disabilities; one plaintiff was under treatment for cancer, theother for asthma and sleep apnea. Although disability is not a suspect class and thus discriminationis evaluated under a rational basis test, the Court had previously shown a heightened sensitivity toarbitrary discrimination against the disabled. (17) Further, Congress had made substantial findings regarding thepervasiveness of such discrimination. However, the Supreme Court declined to consider evidence of discrimination by either theprivate sector or local government, and dismissed the examples that did relate to the states asunlikely to rise to the level of constitutionally "irrational" discrimination. Ultimately, the Court foundthat no pattern of unconstitutional state discrimination against the disabled had been established, andthat the application of the ADA was not a proportionate response to any pattern of discriminationthat might exist. As noted, Kimel and Garrett involved the evaluation of congressional statutes addressingdiscrimination against non-suspect classes. When the class which is the focus of legislation has ahigher level of constitutional protection, however, the Court has seemed to use a more lenientstandard. In the case of Nevada Department of Human Resources v. Hibbs , (18) an employee of the NevadaDepartment of Human Resources had a dispute with the Department regarding how much leave timehe had available under the FMLA. The FMLA requires, among other things, that employers provideemployees up to twelve weeks of unpaid leave to care for a close relative with a "serious healthcondition." (19) In Hibbs , the Court held that Congress had the power to abrogate a state's EleventhAmendment immunity under the FMLA, so that a state employee could recover money damages. The Court found that Congress had established significant evidence of a long and extensive historyof sex discrimination with respect to the administration of leave benefits by the states, and thathistory was sufficient to justify the enactment of the legislation under SS5. The standard fordemonstrating the constitutionality of a gender-based classification is more difficult to meet than therational-basis test, which was at issue in Kimel and Garrett , so it was easier for Congress to showa pattern of state constitutional violations. Judge Alito wrote the opinion for a unanimous court in the case of Chittister v. Departmentof Community and Economic Development , (20) which also considered if Congress had validly abrogated states'Eleventh Amendment immunity when it enacted the Family and Medical Leave Act of 1993. (21) However, unlike thelater-decided Hibbs case, which considered the provision of leave to care for family members, Chittister concerned the provision of personal sick leave "because of a serious health condition thatmakes the employee unable to perform the functions of the position of such employee." (22) In a relatively briefopinion, Judge Alito found that Congress had not abrogated the state's sovereign immunity for causesof action cited by the plaintiff. Although the Chittister case preceded the Court's opinion in Hibbs , some have suggested thatthe opinion should have anticipated the result in that case. (23) As noted, however, theopinion in Chittister dealt with a different provision of the Family Medical Leave Act. The Courtin Hibbs did not decide the constitutionality of the personal sick leave provision considered in Chittister , and there are arguments to be made that distinguish these cases. The Court's decision in Hibbs was based to a large extent on the congressional finding that"denial or curtailment of women's employment opportunities has been traceable directly to thepervasive presumption that women are mothers first, and workers second. This prevailing ideologyabout women's roles has in turn justified discrimination against women when they are mothers ormothers-to-be." (24) Further, because employers assumed that women were primary caretakers, they would deny menleave for such purposes. Thus, both of these stereotypes tended to discourage the hiring ofwomen, (25) and therequirement that employers provide family care leave would alleviate this disparity. This reasoning, however, does not seem applicable to the case of personal sick leave. In Chittister , the Judge Alito noted that Congress's findings that the "the primary responsibility forfamily caretaking often falls on women" would be relevant for evaluation of the family care leaveprovisions. Judge Alito found, however, that there did not appear to be similar findings concerningthe existence of intentional discrimination by employers against women in the provision of personalsick leave practices. (26) Nor did the court think that such practices would be likely to have a disparate impact on men andwomen. Even if such evidence existed, Judge Alito questioned whether the FMLA would be acongruent and proportional response, since it did not require nondiscriminatory sick leave practices,but merely created a minimum level of leave entitlement. Chittister seems to be consistent with the decisions of other federal courts which consideredthis issue before Hibbs was decided. (27) For instance, in the case of Kazmier v. Widmann , (28) the FifthCircuit consideredwhether the personal leave provision of the FMLA could be applied against the states. The courtfirst noted that Congress's express intent in enacting this provision was to prevent employers fromdiscriminating on the basis of temporary disability, (29) not gender. The court did note suggestions in the legislativerecord that Congress also meant for this provision to prevent discrimination against women on thebasis of pregnancy-related disability. (30) The Fifth Circuit, however, rejected an argument that thepersonal sick leave provision was intended to target sex discrimination. First, the court noted that the FMLA contained a separate provision regarding maternityleave, which was arguably more closely related to concerns about pregnancy discrimination. (31) Second, the court notedthat the Supreme Court has held that discrimination on the basis of pregnancy does not violate theEqual Protection Clause, (32) which would make it difficult to show that the provision wasintended to remedy a pattern and history of unconstitutional gender discrimination. Finally, the courtfound that the effect of expressly mandating leave for pregnancy (among other serious healthconditions) would not make employers more likely to hire women, but would actually make womenless attractive employees. Ultimately, the Fifth Circuit decided that the provision at issue was in fact directed solely atdiscrimination based on temporary disability. Unlike discrimination on the basis of sex, however,discrimination on the basis of disability is subject to minimal scrutiny under the Equal ProtectionClause. (33) As such, themost relevant case decided at the time would appear to be the Kimel case, which evaluated anattempt by Congress to remedy discrimination based on age, which is another category with fewerconstitutional protections. Relying on Kimel , the Kazmier court found that the FMLA "prohibitssubstantially more state employment decisions and practices than would likely be heldunconstitutional under the applicable equal protection, rational basis standard." (34) Even after the decision of the Supreme Court in Hibbs , federal courts seemed to followreasoning similar to Chittister and Kazmier . The Sixth Circuit, in Touvell v. Ohio Department ofMental Retardation & Developmental Disability , (35) relied on the Hibbs case to reach essentially the sameconclusion. (36) In fact,the Sixth Circuit specifically suggested that Hibbs did not undermine the reasoning of the variouscases from other circuits that had reached this conclusion previously. In Touvell , the Sixth Circuit made many of the same points as were made in Kazmier and Chittister regarding the legislative record for the FMLA. As in Kazmier , the gender discriminationof concern to the Congress related to the care of family members, and not to personal sickleave. (37) The Court in Touvell found no evidence of gender discrimination with regard to personal medical leave, (38) nor were the requirementsfor providing such leave seen as having any remedial or prophylactic effect on such discrimination. As with the previous cases, the Court found little evidence that gender discrimination was even atissue in the FMLA personal sick leave provisions. Like Kazmier , the Sixth Circuit found that the sick leave provision was more likely intendedto affect disability discrimination, and as such, it would be more difficult to establish a pattern andhistory of constitutional violation. (39) After considering the legislative record regarding disabilitydiscrimination and the nature of the legislation, the Touvell Court concluded that the FMLA personalsick leave provisions were not congruent and proportional responses to any alleged violations. Asdid Chittister and Kazmier , the Sixth Circuit concluded that the personal sick leave provisions couldnot be applied against the state under the Eleventh Amendment. The Commerce Clause provides that "The Congress shall have Power ... To regulateCommerce with foreign Nations, and among the several States, and with the Indian Tribes." (40) Generally speaking,Congress's power under the Commerce Clause can be divided into three categories: (1) regulationof channels of commerce; (2) regulation of instrumentalities of commerce; and (3) regulation ofeconomic activities which "affect" commerce. (41) In the 1995 case, United States v. Lopez , (42) the Supreme Court brought into question the extent to which theCongress can rely on the Commerce Clause as a basis for federal jurisdiction. Under the Gun-FreeSchool Zones Act of 1990, Congress made it a federal offense for "any individual knowingly topossess a firearm at a place that the individual knows, or has reasonable cause to believe, is a schoolzone." (43) In Lopez , theCourt held that, because the act neither regulated a commercial activity nor contained a requirementthat the possession be connected to interstate commerce, the act exceeded the authority of Congressunder the Commerce Clause. Although the Court did not explicitly overrule any previous rulingsupholding federal statutes passed under the authority of the Commerce Clause, the decision appearedto suggest new limits to Congress's legislative authority. Subsequently, the lower federal courts wereleft to determine the precise scope of the limits imposed by the Court in Lopez as applied to otherfederal statutes. One statute that has received a significant amount of post- Lopez attention is 18 U.S.C. SS922(o), which states that "it shall be unlawful for any person to transfer or possess a machine gun"unless one of two exceptions applied. (44) By 1996, when the Third Circuit decided United States v. Rybar ,several other circuits had already determined that section 922(o) was not a violation the CommerceClause. There was, however, little consensus with respect to the reasoning employed. (45) According to the majority in Rybar , several circuits had held that section 922(o) was aregulation of the channels of interstate commerce, therefore, bringing the statute under the firstcategory of commerce power. (46) Moreover, the Seventh Circuit had held section 922(o)constitutional as "an essential part of a larger regulation of economic activity, in which the regulatoryscheme could be undercut unless the intrastate activity were regulated." (47) Finally, the majority notedthat the Tenth Circuit had upheld section 922(o) as a constitutional regulation of the instrumentalitiesof interstate commerce, thus utilizing the second category for permissible regulation of interstatecommerce. (48) The majority opinion in Rybar adds little original analysis to this discussion and did notattempt to resolve the reasoning dispute between the other circuits. Rather, the majority traced thelegislative history of federal firearms statutes and concluded that by the time Congress enactedsection 922(o), "it had already passed three firearm statutes under its commerce power based on itsexplicit connection of the interstate flow of firearms to the increasing serious violent crime in thiscountry, which Congress saw as creating a problem of 'national concern.'" (49) Specifically, with respectto section 922(o), the majority relied on supporting language in committee reports as well as floorstatements during consideration of the legislation. (50) With respect to the constitutional analysis, the majority simplyrecounted the various methods employed by their sister circuits and concluded that section 922(o)was constitutional as a valid exercise of Congress's power under the Commerce Clause. (51) Judge Alito's dissent, however, started by asking whether Lopez was a "constitutional freak,"or whether it represented recognition that the Constitution still provides meaningful limits oncongressional power. (52) In short, Judge Alito concluded that the statute could be saved in one of two ways. If Congress hadprovided the necessary jurisdictional element, thereby limiting the statute to purely interstate activity,or if "Congress made findings that the purely intrastate possession of machine guns has a substantialeffect on interstate commerce...." (53) Since, in Judge Alito's opinion, neither of these tworequirements was satisfied, the statute, as written, should have been held unconstitutional. Given that the majority opted not to assert a unique rationale for its conclusion, Judge Alito'sdissent refuted all three established grounds for holding Section 922(o) constitutional. First, hechallenged the position of the Fifth, Sixth, and Ninth Circuits that the statute is a regulation of thechannels of interstate commerce. According to Judge Alito, those circuits reasoned that underSection 922(o) there could be no unlawful possession without an unlawful transfer, because thestatute exempted lawful possessions prior to its enactment. Further, the circuits argued that therestriction was a necessary and proper way to assist law enforcement in tracking and detecting illegalmachine gun transfers. (54) In Judge Alito's opinion, this reasoning was flawed for threereasons: First, it relied on faulty facts, namely, that every unlawful possession is the result of anunlawful transfer. In fact, as Judge Alito posited, an unlawful possession could result from theconversion of a lawful weapon, or from the expiration of the requisite government authority thatmade possession lawful; (55) second, the rationale "seems to confuse an unlawful transfer withan interstate transfer" (56) ;and finally, the circuits' reliance on the ability of Congress to suppress an interstate market byregulating intrastate behavior is an argument in support of the substantial effects test, not thechannels of interstate commerce. (57) Next, Judge Alito's dissent challenged the assertion by the Sixth and Tenth Circuits thatSection 922(o) can be justified as a regulation of activities that threaten the instrumentalities ofinterstate commerce. Judge Alito argued that this would be true, if, say, Congress enacted the statuteto prevent machine guns from being used to "damage vehicles traveling interstate, to carry outrobberies of goods moving in interstate commerce, or to threaten or harm interstate travelers." (58) Congress, however, madeno such findings, and the reasoning of the Sixth and Tenth Circuits was described by Judge Alito as"elusive" and, in his opinion, better suited to arguing for constitutionality under the substantialeffects prong of the Commerce Clause. (59) Finally, Judge Alito undertook an analysis of the statute under the "substantial effects" prongof the Court's Commerce Clause jurisprudence. Judge Alito's theory was that to bring this case within the third Lopez category, it isnot enough to observe that violent criminals, racketeers, and drug traffickers occasionally usemachine guns in committing their crimes and that these crimes have interstate effects. Rather, theremust be a reasonable basis for concluding that the regulated activity (the purely intrastate possessionof machine guns) facilitates the commission of these crimes to such a degree as to have a substantialeffect on interstate commerce. (60) While not dismissing this theory as irrational, Judge Alito rejected the majority's reasoning for lackof empirical proof of its validity. In other words, according to Judge Alito, there was no substantialevidence that Congress rationally concluded that which was necessary to sustain the statute underthe substantial effects prong. For Judge Alito it appeared that neither the combing of the legislativehistory of federal firearms law, nor the majority's reliance on the committee reports and floorstatements was sufficient to establish that Congress believed that "the purely intrastate possessionof machine guns, by facilitating the commission of certain crimes, has a substantial effect oninterstate commerce." (61) In sum, Judge Alito concluded by stating that out of respect for the principles of federalism, "weshould require at least some empirical support before we sustain a novel law that effects 'a significantchange in the sensitive relation between federal and state criminal jurisdiction.'" (62) A recent opinion by the Supreme Court subsequent to Judge Alito's dissent in Rybar putsmuch of his reasoning in doubt. In Gonzales v. Raich , the United States Supreme Court granted certiorari specifically on the question of whether the power vested in Congress by both the"Necessary and Proper Clause," and the "Commerce Clause" of Article I includes the power toprohibit the local growth, possession, and use of marijuana permissible as a result of California'slaw. (63) Justice Stevens,writing for the majority, reversed the Ninth Circuit's decision and held that Congress's power toregulate commerce extends to purely local activities that are "part of an economic class of activitiesthat have a substantial effect on interstate commerce." (64) In reaching its conclusions, the Court relied heavily on its 1942 decision in Wickard v.Filburn , which held that the Agricultural Adjustment Act's federal quota system applied to bushelsof wheat that were homegrown and personally consumed. Wickard stands for the proposition thatCongress can rationally combine the effects that individual producers have on a commercial marketto find substantial impacts on interstate commerce. (65) The Court pointed to numerous similarities between the factspresented in Raich and those in Wickard . Initially, the Court noted that because the commoditiesbeing cultivated in both cases are fungible and that well-established interstate markets exist, bothmarkets are susceptible to fluctuations in supply and demand based on production intended forhome-consumption being introduced into the national market. (66) According to the Court, just as there was no difference between the wheat Mr. Wickardproduced for personal consumption and the wheat cultivated for sale on the open market, there is nodiscernable difference between personal home-grown medicinal marijuana and marijuana grown forthe express purpose of being sold in the interstate market. (67) Thus, the Court concluded that Congress had a rational basis forconcluding that "leaving home-consumed marijuana outside federal control would similarly affectprice and market conditions." (68) Despite having concluded that under the "rational basis test" Congress had acted within itsconstitutional authority when it enacted the Controlled Substances Act and applied it to intrastatepossession of marijuana, the Court nevertheless had to distinguish Lopez and Morrison , the Court'smore recent Commerce Clause decisions. The Court concluded that the Controlled Substances Act,unlike the statutes in either Lopez (Gun Free School Zones Act) or Morrison (Violence AgainstWomen Act), regulated activity that is "quintessentially economic"; therefore, neither Lopez or Morrison cast any doubts on the constitutionality of the statute. (69) The Court specificallyrejected the reasoning used by the Ninth Circuit, concluding that "Congress acted rationally indetermining that none of the characteristics making up the purported class, whether viewedindividually or in the aggregate, compelled an exemption from the CSA; rather, the subdivided classof activities defined by the Court of Appeals was an essential part of the larger regulatoryscheme." (70) In supporting its conclusions, the Court noted that, by characterizing marijuana as a"Schedule I" narcotic, Congress was implicitly finding that it had no medicinal value at all. Inaddition, the Court returned to the fact that medicinal marijuana was a fungible good, thus makingit indistinguishable from the recreational versions that Congress had clearly intended to regulate. According to the Court, to carve out medicinal use as a distinct class of activity, as the Ninth Circuithad done, would effectively make " any federal regulation (including quality, prescription, or quantitycontrols) of any locally cultivated and possessed controlled substance for any purpose beyond the'outer limits' of Congress'[s] Commerce Clause authority." (71) Moreover, the Court heldthat California's state law permitting the use of marijuana for medicinal purposes cannot be the basisfor placing the respondent's class of activity beyond the reach of the federal government, due to theSupremacy Clause, which requires that, in the event of a conflict between state and federal law, thefederal law shall prevail. (72) Finally, the Court responded to the respondent's argument that its activities are not an"essential part of a larger regulatory scheme" because they are both isolated and policed by the Stateof California and they are completely separate and distinct from the interstate market. (73) The Court held that notonly could Congress have rationally rejected this argument, but also that it "seem[ed] obvious" thatdoctors, patients, and caregivers will increase the supply and demand for the substance on the openmarket. (74) In sum, theCourt concluded that the case for exemption can be distilled down to an argument that a locallygrown product used domestically is immune from federal regulation, which has already beenprecluded by the Court's decision in Wickard v. Filburn . (75) It is difficult to conclude from Judge Alito's opinion in the Chittister case whether or not theJudge has a more restrictive view of the 11th and 14th Amendment than a majority of Justices on theSupreme Court. In general, it appears that Judge Alito's opinion in the Chittister case was consistentwith Supreme Court precedent at the time. Although Judge Alito has been criticized because hisopinion did not anticipate the result in the subsequent case of Nevada Department of HumanResources v Hibbs , the Hibbs case actually addressed a separate provision of the FMLA. The Chittister case is arguably distinguishable from the Hibbs case, a conclusion which has been reachedby other federal circuits. Judge Alito's dissent in the Rybar case, however, seems to have anticipated a more expansiveapplication of the Lopez and Morrison decisions than was adopted by most other circuits at the time. Further, his reasoning in Rybar may have been largely repudiated in the subsequent Supreme Courtcase of Gonzales v. Raich . Consequently, it would appear that Judge Alito's dissent was an argumentfor a more limited interpretation of the Commerce Clause than is consistent with current case law.

During his 15 years as a federal appellate judge on the Third Circuit, Judge Samuel Alito haswritten several opinions related to federalism. Two of these cases appear to be of particularsignificance. In Chittister v. Department of Community and Economic Development , Judge Alitoauthored a unanimous opinion which held that an individual could not sue a state under the FamilyMedical Leave Act (FMLA). This opinion addressed an issue which has been controversial in recentyears -- the parameters of the 11th Amendment and Section 5 of the 14th Amendment. The decisionheld that a provision of the Family Medical Leave Act which mandates the provision of sick leavefor employees with serious health conditions could not be enforced by employees against statesagencies or instrumentalities. In United States v. Rybar , Judge Alito authored a dissent to a decision that upheld a lawproviding that "it shall be unlawful for any person to transfer or possess a machine gun" as withinthe authority of the Congress under the Commerce Clause. Judge Alito, noting that the statute lackedboth a requirement for a specific connection to interstate commerce and findings that the purelyintrastate possession of machine guns had a substantial effect on interstate commerce, would havestruck the law down. In general, it appears that Judge Alito's opinion in the Chittister case was consistent withSupreme Court precedent at the time. Although Judge Alito has been criticized because his opiniondid not anticipate the result in the subsequent case of Nevada Department of Human Resources v.Hibbs , the Hibbs case actually addressed a separate provision of the FMLA. The Chittister case isarguably distinguishable from the Hibbs case, a conclusion which has been reached by other federalcircuits. Judge Alito's dissent in the Rybar case, however, seems to have anticipated a more expansiveapplication of the Supreme Court decisions in Lopez and Morrison than was being utilized by mostother circuits at the time. Further, his reasoning in Rybar may have been repudiated by the SupremeCourt in Gonzales v. Raich . Consequently, it would appear that Judge Alito's dissent was anargument for a more limited interpretation of the Commerce Clause than is consistent with currentcase law.

H.R. 6 was introduced by the House Democratic Leadership to revise certain tax and royalty policies for oil and natural gas and use the resulting revenue to support a reserve for energy efficiency and renewable energy. The bill is one of several introduced on behalf of the Democratic Leadership in the House as part of its "100 hours" package of legislative initiatives conducted early in the 110 th Congress. Title I proposes to reduce certain oil and natural gas tax subsidies to create a revenue stream to support energy efficiency and renewable energy. Title II would modify certain aspects of royalty relief for offshore oil and natural gas development to create a second stream of revenue to support energy efficiency and renewable energy. Title III of H.R. 6 creates a budget procedure for the creation and use of a Strategic Energy Efficiency and Renewable Energy Reserve, under which additional spending for energy efficiency and renewable energy programs can be accommodated without violating enforcement procedures in the Congressional Budget Act of 1974, as amended. The stated purpose of the bill is to "reduce our nation's dependency on foreign oil" by investing in renewable energy and energy efficiency. Specifically, Section 301 (a) of the bill would make the revenue in the Reserve available to "offset the cost of subsequent legislation" that may be introduced "(1) to accelerate the use of domestic renewable energy resources and alternative fuels, (2) to promote the utilization of energy-efficient products and practices and conservation, and (3) to increase research, development, and deployment of clean renewable energy and efficiency technologies." The budget adjustment procedure for use of the Reserve is set out in Section 301 (b). The procedure is similar to reserve fund procedures included in annual budget resolutions. It would require the chairman of the House or Senate Budget Committee, as appropriate, to adjust certain spending levels in the budget resolution, and the committee spending allocations made thereunder, to accommodate a spending increase (beyond FY2007 levels) in a reported bill, an amendment thereto, or a conference report thereon that would address the three allowed uses of the Reserve noted above. The adjustments for increased spending for a fiscal year could not exceed the amount of increased receipts for that fiscal year, as estimated by the Congressional Budget Office, attributable to H.R. 6 . According to the Congressional Budget Office (CBO), the proposed repeal of selected tax incentives for oil and natural gas would make about $7.7 billion available over 10 years, 2008 through 2017. The proposed changes to the royalty system for oil and natural gas are estimated to generate an additional $6.3 billion. This would yield a combined total of $14 billion for the Reserve over a 10-year period. The CBO estimates show that the total annual revenue flow would vary annually over the 10-year period, ranging from a low of about $900 million to a high of about $1.8 billion per year. H.R. 6 came to the House floor for debate on January 18, 2007. In the floor debate, opponents argued that the reduction in oil and natural gas incentives would dampen production, cause job losses, and lead to higher prices for gasoline and other fuels. Opponents also complained that the proposal for the Reserve does not identify specific policies and programs that would receive funding. Proponents of the bill countered that record profits show that the oil and natural gas incentives were not needed. They also contended that the language that would create the Reserve would allow it to be used to support a variety of R&D, deployment, tax incentives, and other measures for renewables and energy efficiency, and that the specifics would evolve as legislative proposals come forth for to draw resources from the Reserve. The bill passed the House on January 18 by a vote of 264-163. In general, the budget resolution would revise the congressional budget for FY2007. It would also establish the budget for FY2008 and set budgetary levels for FY2009 through FY2012. In particular, the House resolution ( H.Con.Res. 99 ) would create a single deficit-neutral reserve fund for energy efficiency and renewable energy that is virtually identical to the reserve described in H.R. 6 . In contrast, the Senate resolution ( S.Con.Res. 21 ) would create three reserve funds, which identify more specific efficiency and renewables measures and would allow support for "responsible development" of oil and natural gas. On March 28, the House passed H.Con.Res. 99 by a vote of 216-210. For FY2007, it would allow for additional funding for energy (Function 270) above the President's request that "could be used for research, development, and deployment of renewable and alternative energy." Section 207 would create a deficit-neutral reserve fund that fulfills the purposes of H.R. 6 to "facilitate the development of conservation and energy efficiency technologies, clean domestic renewable energy resources, and alternative fuels that will reduce our reliance on foreign oil." On March 23, the Senate passed S.Con.Res. 21 , its version of the budget resolution. In parallel to the House resolution, Section 307 of S.Con.Res. 21 would create a deficit-neutral reserve fund that could be used for renewable energy, energy efficiency, and "responsible development" of oil and natural gas. In addition, Section 332 would create a deficit-neutral reserve fund for extension through 2015 of certain energy tax incentives, including the renewable energy electricity production tax credit (PTC), Clean Renewable Energy Bonds, and provisions for energy efficient buildings, products, and power plants. Further, Section 338 would create a deficit-neutral reserve fund for manufacturing initiatives that could include tax and research and development (R&D) measures that support alternative fuels, automotive and energy technologies, and the infrastructure to support those technologies.

H.R. 6 would use revenue from certain oil and natural gas policy revisions to create an Energy Efficiency and Renewables Reserve. The actual uses of the Reserve would be determined by ensuing legislation. A variety of tax, spending, or regulatory bills could draw funding from the Reserve to support liquid fuels or electricity policies. The House budget resolution (H.Con.Res. 99) would create a deficit-neutral reserve fund nearly identical to that proposed in H.R. 6. The Senate budget resolution (S.Con.Res. 21) would create three reserve funds with purposes related to those in H.R. 6. However, the Senate version has more specifics about efficiency and renewables measures, and it would allow reserve fund use for "responsible development" of oil and natural gas.

Children are one of the most vulnerable segments of society during disasters. There are over 38.5 million households with children under 18 years in the United States. The majority of these households could be directly affected by disasters either through disruptions of day-to-day activities or through community disaster mitigation planning efforts. The perils faced by children can include separation from family members, school closures, health care shortages, housing issues, psychological impacts, and many others. The number of children affected by disasters is growing, yet there remains a gap in the inclusion of children in community disaster planning. Planning is just one of many tools that can be used to address the perils children face during and after disasters. Other activities include medical preparedness and response, medical countermeasures, medical transportation, disaster case management, national sheltering standards, housing, and evacuation. Congress established the National Commission on Children and Disasters (the Commission) to address the needs of children in disasters. This report considers the purpose, history, and structure of the Commission; the recommendations contained in the Commission's interim report to Congress; and congressional issues related to the recommendations. In-depth analysis of the recommendations will be undertaken in later reports. The 111 th Congress is currently considering amending the Robert T. Stafford Disaster Relief and Emergency Assistance Act (Stafford Act). The Disaster Response, Recovery, and Mitigation Enhancement Act of 2009 ( H.R. 3377 ) would enhance disaster response, recovery, preparedness, and mitigation capabilities. The Child Safety, Care, and Education Continuity Act of 2010 ( S. 2898 ) provides for the safety, care, and educational needs of children in disasters. Congress may wish to consider expanding proposed legislation or introducing new legislation to amend the Stafford Act to include recommendations of the Commission. Additional issues Congress may wish to consider include eligibility for federal grant funds, the federal role in emergency management, and federal agency role clarification in disaster assistance. In addition to amending the Stafford Act, Congress may elect to assess whether the Homeland Security Act (HSA) should be amended to emphasize the needs of children in emergencies. In recognition of the risks and challenges facing children during and after disasters, the Commission was authorized under the provisions of the Kids in Disasters Well-being, Safety, and Health Act of 2007 ( P.L. 110-161 ) and given federal advisory committee statutory authority under the Consolidated Security, Disaster Assistance, and Continuing Appropriations Act of 2009 ( P.L. 110-329 ) to assess the needs of, and make recommendations about, children in disasters. The Commission is bipartisan, with 10 members appointed by the President and congressional leaders from both parties. The U.S. Department of Health and Human Services (HHS), Administration for Children and Families (ACF), provides financial and administrative support to the Commission. Congress authorized appropriations of $1.5 million for each of FY2008 and FY2009 to enable the Commission to conduct a comprehensive study to examine and assess the needs of children in the preparation for, response to, and recovery from natural disasters, acts of terrorism, and other man-made disasters. After evaluating existing research and recommendations, the Commission is directed to submit a report to the President and Congress on its findings, conclusions, and recommendations to address the identified gaps pertaining to the needs of children in disasters. The interim report of the Commission was provided to the President and Congress on October 14, 2009. The Final Report is projected to be completed by October 2010. According to the U.S. Census, children under the age of 18 comprise over 25% of the population. As a result, almost every disaster will most likely involve children. The vulnerability of children in disasters became most visible when families were separated after Hurricane Katrina, resulting in the displacement of an estimated 183,000 children, many of whom were poor. While it is unclear exactly how many children are recovering from Hurricane Katrina, research suggests that over 20,000 children still lack adequate housing, education, and essential services. The Commission was established to identify gaps in existing research and emergency management practices and make recommendations to address those gaps. Congress required that the Commission be appointed on a bipartisan basis, be representative of private nonprofit entities with expertise in providing assistance to children in disasters, and include the state and local emergency management perspective. Table 1 provides the affiliation and appointment information of the 10 commissioners. Congress directed the Commission to conduct a comprehensive study that examines the needs of children in the preparedness for, response to, recovery from, and mitigation of the impacts of major disasters and emergencies. The terms "major disasters" and "emergencies" were defined to mean the same as such terms under the Stafford Act. Specifically, the authorizing statute directs the Commission to make recommendations in the following areas: child physical health, mental health, and trauma; child care in all settings; child welfare; elementary and secondary education; sheltering, temporary housing, and affordable housing; transportation; juvenile justice; evacuation; and relevant activities in emergency management. The Commission established the following four subcommittees that meet monthly: 1. Education, Child Welfare, and Juvenile Justice; 2. Evacuation, Transportation, and Housing; 3. Human Services Recovery; and 4. Pediatric Medical Care. Each subcommittee operates under a statement of purpose that sets forth the goals and objectives of the subcommittee. These statements are excerpted below. The Education and Juvenile Justice Subcommittee will review issues affecting children and disasters in the areas of emergency preparedness, response, and recovery in schools, child care facilities, institutions of juvenile justice and corrections, and child welfare institutions. Areas of focus will include coordination with state and local planning efforts, identification of key services, training of personnel, and communication among all stakeholders, including parents and caregivers. The Subcommittee on Evacuation, Transportation and Housing will be recommending minimum standards for the care of children during evacuation, transportation and housing at any phase of a disaster situation. The Subcommittee will seek ways to encourage greater responsibility and accountability for the development and maintenance of standards that ensure the safety and accessibility for children, regardless of whether the services are provided by government or non-governmental organizations. To achieve this goal, the Subcommittee will investigate approaches, both internationally and domestically, to identify best practices and address existing gaps. The Subcommittee will facilitate collaboration of subject matter experts and stakeholders to address the identified issues by thoughtfully integrating the needs of children in these environments. The Human Services Recovery Subcommittee will focus on how to optimize recovery efforts in the aftermath of disasters and emergencies from the perspective of meeting the long-term essential needs of children and safe-guarding their well-being. Disasters and emergencies, especially those of a large-scale or catastrophic nature, can disrupt communities and community services for extended periods, during which timely access to appropriate child care, schools, supervised after-school programs, and health care (including physical health, mental and behavioral health, and oral health services) is at risk. This situation is frequently complicated by persistently unstable housing and lack of holistic disaster case management services. During disaster recovery, children must be provided these services within a supportive environment that ensures optimal recovery for individual children, their guardians, and the community as a whole. The Subcommittee will work to encourage policies and strategies that minimize the traumas and disruptions associated with long-term recovery. The Subcommittee on Pediatric Medical Care will explore ways to improve the current system for providing acute medical care to children in disasters, including improvements to the current processes for developing, stockpiling, and distributing medical countermeasures for children in a disaster and ensuring an effective emergency medical response system for children with sufficient pediatric-specific surge capacity. Congress authorized appropriations of $1.5 million for each of FY2008 and FY2009 for activities of the Commission. Even though Congress authorized $1.5 million, HHS provided $500,000 from discretionary appropriations for Commission activities for FY2008. In FY2009, HHS received $1.5 million to fund the Commission. H.R. 3293 , pending before the 111 th Congress, would provide $1 million to the Commission for FY2010. No proposals have been submitted by the Administration for FY2011 funding. Congress has directed the Commission to provide a final report in October 2010 but has not provided authorization for appropriations during the fiscal year in which the final report is due. Therefore, Congress may wish to consider the funding needs of the Commission during the period immediately following submission of the final report. The Commission has held several meetings since the first meeting on October 14, 2008. In addition to public meetings, members of the Commission have testified at the following congressional hearings: Senate Committee on Homeland Security and Governmental Affairs, Subcommittee on Disaster Recovery, Focus on Children in Disasters: Evacuation Planning and Mental Health Recovery , August 4, 2009; House Committee on Transportation and Infrastructure, Subcommittee on Economic Development, Public Buildings, and Emergency Management, Looking Out for the Very Young, the Elderly and Others with Special Needs: Lessons from Katrina and Other Major Disasters , October 20, 2009; Senate Committee on Homeland Security and Governmental Affairs, Subcommittee on Disaster Recovery, Disaster Case Management: Developing a Comprehensive National Program Focused on Outcomes , December 2, 2009; and Senate Committee on Homeland Security and Governmental Affairs, Subcommittee on Disaster Recovery, Children and Disasters: A Progress Report on Addressing Needs , December 10, 2009. The Commission submitted an interim report to the President and Congress in October 2009. The Commission has developed 11 categories of recommendations in its Interim Report: (1) disaster management and recovery; (2) mental health; (3) child physical health and trauma; (4) emergency medical services and pediatric transport; (5) disaster case management; (6) child care; (7) elementary and secondary education; (8) child welfare and juvenile justice; (9) sheltering standards, services and supplies; (10) housing; and (11) evacuation. The following section summarizes the recommendations and provides context for their consideration. The interim recommendations of the Commission for disaster management and recovery focus on the content and structure of disaster planning documents utilized at the federal, state, and local level. Specifically, the Commission recommends that stakeholders "distinguish and comprehensively integrate the needs of children across all inter- and intra-governmental disaster planning activities and operations"; and "accelerate the development of a National Disaster Recovery Strategy with an explicit emphasis on immediate and long-term physical and mental health, educational, housing, and human services recovery needs of children." The Commission appears to emphasize the need to distinguish planning that addresses the needs of children from the larger "special need," "at risk," or "vulnerable" population categories frequently seen in federal, state, and local disaster planning documents. The Stafford Act provides the authority for the prioritization of individuals with "serious needs." The Post-Katrina Emergency Management Reform Act of 2006 amended the Stafford Act to specifically address the needs of the disabled population in disasters. Congress may wish to consider further amending Section 408 to specifically address the needs of children in disasters. Additionally, the Commission has concerns that planners will simply create an appendix in existing documents for the needs of children rather than incorporating those needs into the overall planning approach. Under existing statutory authority, Congress has directed FEMA to ensure increased efficiency through coordination of mitigation, planning, response, and recovery efforts. FEMA was also directed to lead and support evacuation and related emergency operations. In acknowledgement of the pending revision to the National Response Framework (NRF) in 2010, the Commission recommends that the Department of Homeland Security (DHS) elevate the needs of children through revision of the National Response Framework Emergency Support Functions to distinctly address children in disasters. The Commission recommends providing for the mental and behavioral health needs of children affected by disasters through integrating "mental and behavioral health for children into all public health and medical preparedness and response activities"; enhancing the "research agenda for children's disaster mental and behavioral health, including psychological first aid, cognitive-behavioral interventions, social support interventions, and bereavement counseling and support"; and enhancing "pediatric disaster mental and behavioral health training for professionals and paraprofessionals, including psychological first aid, cognitive-behavioral interventions, social support interventions, and bereavement counseling and support." The Commission suggests that the above recommendations can be achieved by establishing mental and behavioral health as a core component of federal, state, and local unified incident command structures such as the National Incident Management System (NIMS). FEMA administers a Crisis Counseling Assistance and Training program that provides supplemental funding to state mental health authorities for crisis counseling for up to nine months following a disaster declaration. The nine-month time limit provision is set forth in regulations but is not in statute. Congress may wish to consider whether the regulatory provisions are appropriate. However, the Commission seems to suggest that there need to be provisions for mental and behavioral health services beyond nine months. The Commission recommends addressing the issues of child physical health and trauma in disasters by ensuring the "availability and access to pediatric medical countermeasures at the federal, state, and local level for chemical, biological, radiological, nuclear, and explosive (CBRNE) threats"; expanding the "medical capabilities of all federally funded response teams through the comprehensive integration of pediatric-specific training, guidance, exercises, supplies, and personnel"; ensuring "that all health care professionals who may treat children during an emergency have adequate pediatric disaster clinical training specific to their role"; providing "funding for a formal regionalized pediatric system of care for disasters"; and ensuring "access to physical and mental health services for all children during recovery from disaster." The Commission recommends reviewing existing federal programs, such as the disaster assistance programs provided under the provisions of the Stafford Act, to assess the feasibility of expanding eligibility to include clinics that provide physical and mental health services. The Stafford Act provides statutory authority for the repair, restoration, and replacement of damaged facilities under a program commonly referred to as public assistance. Currently, eligibility is limited to state and local governments and private nonprofit facilities. Issues related to eligibility for federal funds are discussed in greater detail in subsequent sections of this report. Congress may wish to consider whether the current eligibility will suffice or whether to expand eligibility for the public assistance program to allow for the repair, restoration, or replacement of certain for-profit facilities identified by the Commission as stakeholders in providing essential services to children in disasters. The one recommendation of the Commission for emergency medical services and pediatric transport involves "improving the capacity of emergency medical services (EMS) to transport pediatric patients and provide comprehensive pre-hospital pediatric care during daily operations and disasters." The Commission recommends establishing a dedicated grant program for EMS, similar to the Metropolitan Medical Response System program within the DHS Homeland Security Grant Program, and providing additional funding for the Emergency Medical Services for Children program to increase day-to-day pediatric emergency preparedness. The Stafford Act contains provisions that enable the President to provide accelerated federal assistance to save lives and prevent human suffering. Congress may wish to consider whether this authority would extend to the emergency medical services and pediatric transport during disasters. The one recommendation of the Commission for disaster case management involves establishing a "holistic federal disaster case management program with an emphasis on achieving tangible positive outcomes for all children and families within a presidentially-declared disaster area." After Hurricane Katrina, Congress recognized that the existence of multiple case management programs after a disaster causes confusion for providers and clients. Currently, under the provisions of the Stafford Act, FEMA is the lead agency in coordinating disaster case management, predominately through mission assignments. After Hurricane Katrina, HHS developed a holistic disaster case management model. In December 2009, FEMA and HHS entered into an interagency agreement to implement a coordinated disaster case management program. The Commission recommends addressing child care needs in disasters through requiring "disaster planning capabilities for child care providers"; and improving "capability to provide child care services in the immediate aftermath of and recovery from a disaster." Currently, the Child Care Bureau at HHS encourages (but does not require) states to develop emergency preparedness and response plans to address planning, recovery, and response efforts specific to child care and other early childhood programs. The Child Care Bureau notes that, "child care is an essential human service and critical component in the immediate aftermath of a disaster necessary to protect the safety of children and support the stabilization of families." In child care plans for the years 2008-2009, 31 state and territory child care agencies reported that they were developing (or had already developed) emergency preparedness plans and/or policies and procedures. The Child Care Bureau has also issued an information memorandum on flexibility in spending federal child care funds in response to federal or state declared emergencies. This memorandum reviews a handful of ways that states may utilize the flexibility of federal child care funds to support families affected by disasters, including ways to support displaced families and waive certain eligibility requirements. The Commission recognizes the critical role of elementary and secondary institutions in disasters. Consequently, the Commission recommends establishing "a school disaster preparedness program and appropriate funds to the U.S. Department of Education (DOE) for a dedicated and sustained funding stream to all state education agencies" for state- and district-level disaster response planning, training, exercises, and evaluation; and enhancing the "ability of school personnel to support children who are traumatized, grieving or otherwise recovering from a disaster." Currently, there are no federal laws that require local educational agencies (LEAs) to have emergency management plans. However, some federal support is available to assist LEAs in developing these plans. For example, both the U.S. Department of Education (ED) and DHS administer programs that could provide funding to LEAs for emergency management planning purposes. The Readiness and Emergency Management for Schools (REMS) program administered by ED has provided funds to LEAs to develop and improve emergency management plans for LEAs and school buildings. DHS administers the State Homeland Security program, the Urban Area Security Initiative, and the Citizens Corps program, which provides funds to state and local governments for emergency management planning. To address the child welfare and juvenile justice issues in disasters, the Commission recommends providing "guidance, technical assistance, and model plans to assist state and local child welfare agencies in meeting current applicable disaster planning requirements and further requiring collaboration with state and local emergency management, courts, and other key stakeholders"; and conducting a "national assessment of disaster planning and preparedness among state and local juvenile justice systems to inform the development of comprehensive disaster plans." States must have in place certain procedures to address the safety and well-being of children during disasters. Following the Gulf Coast hurricanes of 2005, Congress passed P.L. 109-288 to amend Title IV-B of the Social Security Act (SSA), requiring that states develop procedures to respond to and maintain child welfare services in the wake of a disaster. The act specified that HHS establish criteria for how state child welfare systems would respond. The one recommendation of the Commission for sheltering standards, services and supplies involves providing a "safe and secure mass care shelter environment for children, including appropriate access to essential services and supplies." Included in this recommendation is the need to develop and implement national standards for mass care shelters, methods for ensuring that age-appropriate essential supplies are available, training for shelter workers, and measures to screen shelter workers and volunteers working with children. Section 403 of the Stafford Act provides the President with the authority to dedicate federal resources to address sheltering needs. The NRF provides guidance for the federal role in the provision of shelters in disasters. Under the Stafford Act, the distribution of food and essential needs that may be provided in the shelters is administered by the American Red Cross, the Salvation Army, the Mennonite Disaster Service, and other disaster assistance organizations. One of the challenges in implementing national standards for shelters is that many of the sheltering needs during disasters are provided by local community organizations that may not have the resources that the larger disaster assistance organizations may have in order to meet the standards. Additionally, if the local community organization shelter does not receive federal assistance, there is no mechanism to enforce the standards. In large-scale disasters, local community organizations such as churches that do not traditionally become involved in sheltering may step forward. While the standards may provide guidance to organizations that provide disaster assistance on a consistent basis, there may be a lack of awareness among the non-traditional shelter providers. Given the wide range of stakeholders that may potentially provide sheltering services, the greatest challenge in establishing standards directed towards sheltering requirements is the ability to encourage compliance of shelters that may not receive federal funding. The one recommendation of the Commission for housing involves "prioritizing families with children for disaster housing assistance and expedited transition into permanent housing, especially families with children who have disabilities or other special health, mental, or educational needs." The disaster housing issue encompasses several concerns, including the condition of temporary housing, the lack of affordable housing in disaster-affected areas, and physical and mental burdens placed on children due to frequent housing transitions. The one recommendation of the Commission for evacuation involves family reunification as a critical element of disaster-related evacuations. Months after Hurricane Katrina struck, over 5,000 children were reported as missing to the National Center for Missing and Exploited Children. In recognition of the challenges of family reunification, the Commission recommends developing a "standardized, interoperable, national evacuee tracking and family reunification system that ensures the safety and well-being of children." The Post-Katrina Emergency Management Reform Act (PKEMRA) required FEMA to establish the National Emergency Family Registry and Locator (NEFRL) system and the National Emergency Child Locator Center to address family reunification needs in disasters. PKEMRA also required FEMA to establish a disability coordinator to ensure that the needs of individuals with disabilities in disasters are addressed. Currently, there is no similar statutory provision for a coordinator for children in disasters. Congress may wish to consider establishing a coordinator within FEMA that would ensure that the needs of children are addressed in the development and implementation of a national, standardized, and interoperable evacuee tracking and family reunification system. In addition to the issues above pertaining to the recommendations of the Commission, Congress may wish to consider policy options not addressed by the Commission. These include the role of federal agencies, transitioning disaster assistance coordination to the states, and federal grants-in-aid. There are many challenges involved in combining federal funding sources to address disaster related needs. Among these challenges is the determination of the role of each federal agency involved in a single disaster recovery project. FEMA and HUD each hold a distinct role in community recovery. Each federal agency arguably implements policy under different recovery objectives. For example, HUD programs have traditionally been viewed as a tool to promote economic development. Economic development initiatives generally encompass recovery projects that promote redeveloping and rejuvenating the economic base of communities. By comparison, FEMA programs generally fall under the auspices of short-term recovery needs and hazard mitigation and do not necessarily seek to make communities whole or provide for long-term quality of life factors. The focus of most FEMA assistance is to provide for the immediate shelter needs of individuals and restore critical infrastructure such as power, water and sewage systems, and postal services. FEMA grant programs have traditionally been considered reimbursement programs in which individuals and communities are partially reimbursed for losses and damage to properties. The Commission may need to address some of the challenges associated with implementing the interim recommendations that require alignment of two or more different recovery philosophies and differing program goals in a disaster coordination framework. Because the definition of disaster case management is unclear, the role of FEMA, HUD, and HHS in the provision of disaster case management services remains unclear. While existing statutory authority suggests that FEMA serves as the lead federal agency, each agency implements policies and programs under different disaster case management objectives. While clarity of definitions may be useful in determining the jurisdictions of various agencies in providing disaster case management, definitions may also hinder the ability of agencies to be flexible in providing assistance for disasters of varying scale. Rather than defining disaster recovery and disaster case management, Congress may wish to consider clarifying the scope of the federal role in providing disaster case management in order to provide a basis for aligning the program objectives of relevant federal agencies and the point of transition for disaster case management to state and local coordination. One of the greatest challenges of disaster assistance is determining when a state devastated by a disaster is able to resume the lead role of coordinating disaster assistance. Under the provisions of the Stafford Act, states request federal assistance only after they have determined that they have exceeded their capacity to respond to and recover from a disaster. While the federal government steps in to provide financial and administrative assistance, the role of the state continues to be prominent in the decision-making regarding disaster assistance. Questions remain concerning when the federal government should transition coordination of long-term recovery back to state and local governments. While the Disaster Recovery Working Group established by President Barrack Obama may provide some insight into transitioning disaster assistance coordination to the states, Congress may wish to use the work of the Commission to identify points of transition for programs that provide federal disaster assistance to children. The Commission has recommended that DHS prioritize grant funding for preparedness, planning, training, and exercise projects that include children. However, a number of entities directly serving children, such as private schools and daycare centers classified as small businesses, would not be eligible for assistance under most federal grant programs. The Stafford Act establishes the authority for determining eligibility. While DHS can prioritize funding for projects that include children, that funding is limited to eligible applicants. Generally, eligibility for federal disaster assistance is limited to state government agencies, local governments, federally recognized Indian Tribal governments and Alaska Native villages and organizations, and certain private nonprofit organizations. Additionally, many of the emergency medical services utilized during disasters are provided by private businesses that also would not be eligible for many of the federal grant programs that fund disaster planning, training, and exercises. Expanding federal grant eligibility may be justified because many of the services provided by private entities such as child care facilities and physical and mental health clinics provide a service that fills a gap left by limited local, state, and federal resources. The statutory provisions of the FEMA Public Assistance program state that part of the criteria for a private nonprofit facility to qualify for assistance is the determination that it provides "essential governmental type services to the general public." Arguably, for-profit organizations that may be providing an "essential governmental type service" during disasters should also be eligible for federal grant assistance. However, expanding grant eligibility would result in a significant increase in federal expenditures for disaster assistance. Congress may wish to consider whether to change eligibility to implement the recommendations of the Commission. Legislation introduced in the 111 th Congress includes provisions for child safety and education continuity in disasters ( S. 2898 ), and changes to federal programs addressing community preparedness and mitigation ( H.R. 3377 ). The Child Safety, Care, and Education Continuity Act of 2010 ( S. 2898 ) includes provisions that address many of the child care and education recommendations of the Commission. However, Congress may wish to consider expanding the provisions of S. 2898 to address additional recommendations pertaining to mental health, emergency medical services and pediatric transport, disaster case management, sheltering standards, and housing. Section 102 of the Disaster Response, Recovery, and Mitigation Enhancement Act of 2009 ( H.R. 3377 ) provides for the implementation of the recommendations of a congressional committee. Congress may wish to consider whether the evacuation recommendations of the Commission could be incorporated into implementation of other committee recommendations. Section 201 of H.R. 3377 provides federal assistance to states wishing to enhance mitigation activities. Congress may wish to consider incorporating sheltering recommendations of the Commission into the mitigation provisions of the bill. Children are one of the most vulnerable segments of society during disasters. Traditionally, they are included in broader disaster planning categories such as "special needs populations" or "at-risk populations." The increasing frequency and scale of disasters has made the needs of children a critical element of disaster planning. When assessing how to meet the needs of children in disasters, some consideration needs to be given to whether existing statutory authority provides federal agencies the flexibility to meet those needs, or whether congressional intervention is necessary to ensure that special provisions are made for children. The range of activities associated with meeting the needs of children in disasters spans multiple levels of government and the private and nonprofit sectors of society. While there is an undeniable need to prevent loss of life and provide for the quality of life for children, there remains some question about the role of various stakeholders in funding and coordinating emergency management activities. Evaluating the recommendations of the Commission within the context of existing statutory and regulatory provisions may also provide some insight into the gaps in funding and coordination, and the appropriate federal role, in caring for children affected by disasters.

The National Commission on Children and Disasters (the Commission) is authorized under the provisions of the Kids in Disasters Well-being, Safety, and Health Act of 2007 (P.L. 110-161) and given federal advisory committee statutory authority under the Consolidated Security, Disaster Assistance, and Continuing Appropriations Act of 2009 (P.L. 110-329). The U.S. Department of Health and Human Services (HHS), Administration for Children and Families (ACF), provides financial and administrative support to the Commission, whose purpose is to assess the needs of children in the preparation for, response to, and recovery from natural disasters, acts of terrorism, and other man-made disasters. Congress authorized appropriations of $1.5 million for each of FY2008 and FY2009 for the Commission to conduct a comprehensive study to examine and assess the needs of children as they relate to preparation for, response to, and recovery from all hazards including natural disasters, acts of terrorism, and other man-made disasters. After evaluating existing research and recommendations, the Commission is directed to submit a report to the President and Congress on its findings, conclusions, and recommendations to address the identified gaps pertaining to the needs of children in disasters. The Interim Report of the Commission was provided to the President and Congress on October 14, 2009, and the Final Report is projected to be completed by October 2010. The 111th Congress is currently considering amending the Robert T. Stafford Disaster Relief and Emergency Assistance Act (Stafford Act) to enhance disaster response, recovery, preparedness and mitigation capabilities (H.R. 3377). Congress is also considering legislation that would establish provisions for education, child care, emergency planning, and health care guidance to address the safety of children after a disaster (S. 2898). Issues Congress may wish to consider include expanding proposed legislation or introducing new legislation to amend the Stafford Act, or amending the Homeland Security Act, to include recommendations of the Commission. Additional issues Congress may wish to consider include what administrative options are available to implement the Commission recommendations and where there may be a need for congressional action.

T he mission of the Department of Justice (DOJ) is to "enforce the law and defend the interests of the United States according to the law; to ensure public safety against threats foreign and domestic; to provide federal leadership in preventing and controlling crime; to seek just punishment for those guilty of unlawful behavior; and to ensure fair and impartial administration of justice for all Americans." DOJ was established in 1870 with the Attorney General as its leader. Since its creation, DOJ has added additional agencies, components, offices, boards, and divisions to its organizational structure. DOJ, along with the judicial branch, operates the federal criminal justice system. The department enforces federal criminal and civil laws, including antitrust, civil rights, environmental, and tax laws. Through agencies such as the Federal Bureau of Investigation (FBI); the Drug Enforcement Administration (DEA); and the Bureau of Alcohol, Tobacco, Firearms, and Explosives (ATF), it investigates terrorism, organized and violent crime, illegal drugs, and gun and explosives violations, among others. Through the U.S. Marshals Service (USMS), it protects the federal judiciary, apprehends fugitives, and detains alleged offenders who are not granted pretrial release. DOJ investigates and prosecutes individuals accused of violating federal laws, and it represents the U.S. government in court. DOJ's Bureau of Prisons (BOP) houses individuals accused and convicted of federal crimes. In addition to its role in administering the federal criminal justice system, the department also provides grants and training to state, local, and tribal law enforcement agencies and judicial and correctional systems. This report describes actions taken by the Administration and Congress to provide FY2018 funding for DOJ. It also provides an overview of some of the funding proposals put forth by the Administration in its FY2018 budget request for DOJ. Each of DOJ's accounts are usually funded as a part of the annual Commerce, Justice, Science, and Related Agencies (CJS) appropriations act. Accounts under the General Administration heading provide funds for salaries and expenses for the Attorney General's office, the Inspector General's office, and other programs designed to ensure that the efforts of DOJ agencies, offices, boards, and divisions are coordinated, economical, and efficient. The Salaries and Expenses account supports the Attorney General and senior DOJ leadership as they manage DOJ's resources and formulate policies for legal, law enforcement, and criminal justice activities. The Justice Information Sharing Technology account provides funding for DOJ's information technology programs. In FY2017, Congress and the President changed the title of the Administrative Review and Appeals account to the Executive Office for Immigration Review (EOIR) account. Funding for the Pardon Attorney, which was previously part of the Administrative Review and Appeals account, was moved to the General Legal Activities account. The EOIR is responsible for the review and adjudication of immigration cases, in coordination with the Department of Homeland Security (DHS). The OIG account supports efforts to detect and deter waste, fraud, and abuse involving DOJ programs and personnel; promote economy and efficiency in DOJ operations; and investigate allegations of departmental misconduct. The U.S. Parole Commission account supports the commission's mission to adjudicate parole requests for prisoners who are serving felony sentences for federal and District of Columbia criminal code violations. The commission also sets the conditions of release for offenders under its jurisdiction and makes determinations about whether to return parolees who have violated the terms of their release to prison. The Legal Activities account includes several subaccounts: General Legal Activities, U.S. Attorneys, the Antitrust Division, the Vaccine Injury Compensation Trust Fund, the U.S. Trustee System Fund, the Foreign Claims Settlement Commission, Fees and Expenses of Witnesses, and the Community Relations Service. These subaccounts support a wide array of activities. For example, the General Legal Activities subaccount funds the Office of the Solicitor General to supervise and conduct government litigation in proceedings before the Supreme Court. It also funds the activities of several DOJ divisions (tax, criminal, civil, environment and natural resources, legal counsel, civil rights, INTERPOL, and dispute resolution) . Via this account, Congress and the President also establish a limit on how much can be spent from the Assets Forfeiture Fund to cover certain authorized expenses. The USMS account supports the protection of the federal judicial process, including protecting judges, attorneys, witnesses, and jurors. In addition, the USMS provides physical security in courthouses, transports prisoners to and from court proceedings, apprehends fugitives, executes warrants and court orders, oversees the detention of alleged offenders pretrial, and seizes forfeited property. The NSD account supports the coordination of DOJ's national security and terrorism missions. The NSD was established in DOJ in response to the recommendations of the Commission on the Intelligence Capabilities of the United States Regarding Weapons of Mass Destruction (WMD Commission), and authorized by Congress and the President in the USA PATRIOT Improvement and Reauthorization Act of 2005 ( P.L. 109-177 , enacted March 9, 2006). Under the NSD, the Office of Intelligence Policy and Review and the Criminal Division's Counterterrorism and Counterespionage Sections' resources were consolidated to coordinate the department's intelligence-related resources and to ensure that criminal intelligence information is shared, as appropriate. The Interagency Law Enforcement account reimburses DOJ agencies for their participation in the Organized Crime Drug Enforcement Task Force (OCDETF) program. Organized into 12 task forces, this program combines the expertise of federal agencies with those of state and local law enforcement to disrupt and dismantle major narcotics trafficking and money laundering organizations. The DOJ agencies, divisions, and offices that participate in OCDETF are the DEA, FBI, ATF, USMS, the Tax and Criminal Divisions of DOJ, and U.S. Attorneys. Other agencies participating in OCDETF are U.S. Immigration and Customs Enforcement, the U.S. Coast Guard, the Treasury Office of Enforcement, and the Internal Revenue Service. The FBI account supports the lead federal investigative agency charged with defending the country against foreign terrorist and intelligence threats; enforcing federal laws; and providing leadership and criminal justice services to federal, state, local, tribal, and territorial law enforcement agencies and partners. Since the September 11, 2001 (9/11) terrorist attacks the FBI has reorganized and reprioritized its efforts to focus on preventing terrorism and related criminal activities. The DEA account supports the only single-mission federal agency tasked with enforcing the nation's controlled substance laws, reducing the availability and abuse of illicit drugs, and preventing the diversion of licit drugs for illicit purposes. The DEA's enforcement efforts include the disruption and dismantling of drug trafficking and money laundering organizations through drug interdiction and seizures of illicit revenues and assets derived from these organizations. The agency plays a key role in federal efforts to counter drug-related violence by focusing on the convergent threats of illegal drugs, drug-related violence, and terrorism. The DEA also has an active role in the Prescription Drug Abuse Prevention Plan through the targeting of improper prescribing practices and promoting proper disposal of unused prescription drugs. The ATF enforces federal criminal law related to the manufacture, importation, and distribution of alcohol, tobacco, firearms, and explosives. The ATF works independently and through partnerships with industry groups; international, state, and local governments; and other federal agencies to investigate and reduce crime involving firearms and explosives, acts of arson, and illegal trafficking of alcohol and tobacco products. BOP was established in 1930, and its account supports the housing of federal inmates, professionalization of the prison service, and the consistent and centralized administration of the federal prison system. The mission of the BOP is to protect society by confining offenders in prisons and community-based facilities that are safe, humane, cost-efficient, and appropriately secure, and to provide work and other self-improvement opportunities for inmates so that they can become productive citizens after they are released. The BOP currently operates 122 correctional facilities across the country. It also contracts with Residential Re-entry Centers (RRCs, i.e., halfway houses) to provide assistance to inmates nearing release. RRCs provide inmates with a structured and supervised environment along with employment counseling, job placement services, financial management assistance, and other programs and services. OVW was established to administer programs created under the Violence Against Women Act of 1994 (VAWA) and subsequent legislation. The OVW account and the programs it supports provide financial and technical assistance to communities around the country to facilitate the creation of local programs, policies, and practices designed to improve the criminal justice response to domestic violence, dating violence, sexual assault, and stalking. OJP manages and coordinates the National Institute of Justice; Bureau of Justice Statistics; Office of Juvenile Justice and Delinquency Prevention; Office for Victims of Crime; Bureau of Justice Assistance; the Office of Sex Offender Sentencing, Monitoring, Apprehending, Registering, and Tracking; and related grant programs. The Research, Evaluation, and Statistics account (formerly the Justice Assistance account) funds the operations of the Bureau of Justice Statistics and the National Institute of Justice, among other related activities. The State and Local Law Enforcement Assistance account includes funding for a variety of grant programs to improve the functioning of state, local, and tribal criminal justice systems. Some examples of programs that have traditionally been funded under this account include the Edward Byrne Memorial Justice Assistance Grant (JAG) program, the Drug Courts program, the State Criminal Alien Assistance Program (SCAAP), and DNA backlog reduction program. The Juvenile Justice Programs account includes funding for grant programs administered by the Office of Juvenile Justice and Delinquency Prevention to reduce juvenile delinquency and help state, local, and tribal governments improve the functioning of their juvenile justice systems. The Public Safety Officers Benefits (PSOB) program account provides three different types of benefits to public safety officers and their survivors: death, disability, and education. The PSOB program is intended to assist in the recruitment and retention of law enforcement officers, firefighters, and first responders. The COPS account supports the awarding of grants to state, local, and tribal law enforcement agencies throughout the United States to hire and train law enforcement officers to participate in community policing, purchase and deploy new crime-fighting technologies, and develop and test new and innovative policing strategies. The CVF was established by the Victims of Crime Act of 1984 ( P.L. 98-473 , VOCA). It is administered by the Office for Victims of Crime (OVC) and provides funding to the states and territories for victim compensation and assistance programs. This account does not receive appropriations but instead is funded by criminal fines, forfeited bail bonds, penalties, and special assessments that are collected by U.S. Attorneys Offices, U.S. courts, and the BOP. The Consolidated Appropriations Act, 2017 ( P.L. 115-31 ) provided a total of $28.962 billion for DOJ. The act provided $2.713 billion for the U.S. Marshals, $9.006 billion for the FBI, $2.103 billion for the DEA, $1.259 billion for the ATF, and $7.142 billion for the BOP. The remaining funding (approximately $6.739 billion) was for DOJ's other offices--such as the U.S. Attorneys Offices, the Executive Office for Immigration Review, and the Attorney General's office--and to support the other functions noted above. For FY2017, appropriated funding for OVW was supplemented with a transfer from the CVF. A total of $482 million in new budget authority is available for OVW, but $326 million comes via a transfer from the CVF. The Trump Administration requested $28.205 billion for DOJ for FY2018. The requested amount was 2.6% less than the FY2017 enacted appropriation. The Administration proposed reductions for several DOJ accounts. These included a $232 million (-2.6%) reduction for the FBI, which was largely the result of a $187 million (-78.3%) reduction in the Construction account, but also a $44 million (-0.5%) reduction in the FBI's Salaries and Expenses account. The Administration also proposed reductions for the following: State and Local Law Enforcement Assistance (-$340 million, -26.6%), Juvenile Justice Programs (-$21 million, -8.3%), and Community Oriented Policing Services (-$4 million, -1.5%). The Trump Administration's FY2018 budget request proposed transferring $445 million from the CVF to OVW, $73 million from the CVF to the State and Local Law Enforcement Assistance account, and $92 million from the CVF to the Juvenile Justice Programs account. While the Administration's FY2018 budget request included several reductions for DOJ, it also included several proposed increases: The Offices of the United States Attorneys (+$22 million, 1.1%), The U.S. Marshals Service's Federal Prisoner Detention account (+$82 million, 5.6%), The National Security Division (+$5 million, +5.2%), Interagency Law Enforcement (+$9 million, +1.7%), The Bureau of Prisons' Salaries and Expenses account (+$76 million, +1.1%), The Drug Enforcement Administration (+$61 million, +2.9%), The Bureau of Alcohol, Tobacco, Firearms, and Explosives (+$15 million, +1.2%), and The Executive Office for Immigration Review (+$60 million, +13.9%). The Trump Administration proposed eliminating 11,523 positions and 3,587 full-time equivalents (FTEs) across DOJ. The reductions were a part of a "workforce rightsizing initiative" ordered by Attorney General Sessions. The reductions would have come through attrition and "administrative savings" (-2,125 positions and -2,084 FTEs), and through eliminating "funded but unfilled" positions and FTEs (-9,398 positions and -1,503 FTEs). The majority of eliminated positions and FTEs would have come from the FBI (-2,095 positions and -1,843 FTEs), DEA (-1,350 positions and no FTEs), USMS (-612 positions and -94 FTEs), BOP (-6,132 positions and -846 FTEs), and General Legal Activities (-587 positions and -129 FTEs). These reductions would have established a new staffing baseline for DOJ's current services. H.R. 3354 , an omnibus appropriations measure that the House passed on September 14, 2017, would have provided $29.310 billion for DOJ, 3.5% more than the Administration's request and 1.2% more than the FY2017 enacted appropriation. Compared to the FY2017 enacted appropriation, the House-passed bill included an $88 million (+3.2%) increase for the USMS, a $54 million (+2.6%) increase for the DEA, and a $36 million+ (2.8%) increase for the ATF. There were also increases for the Offices of the U.S. Attorneys (+$22 million, +1.1%) and BOP (+$26 million, +0.4%) related to the FY2017 enacted appropriations. The bill would have reduced funding overall for the FBI by $139 million (-1.6%) relative to the FY2017 enacted appropriation, but this is due to a $187 million (-78.3%) reduction in the FBI's Construction account. The House bill would have increased funding for the FBI's Salaries and Expenses account. The House also declined to adopt the Administration's proposal to supplement appropriations from the General Fund of the Treasury for the Office on Violence Against Women, State and Local Law Enforcement Assistance, and Juvenile Justice Programs accounts with transfers from the Crime Victims Fund. The bill reported by the Senate Committee on Appropriations would have provided $29.068 billion for DOJ, 2.6% more than the Administration's request and 0.4% more than the FY2017 enacted appropriation. The Senate Committee on Appropriations would have funded most DOJ accounts at or above the FY2017 enacted level. The committee-reported bill included a $108 million (+4.0%) increase for the USMS, a $13 million (+0.6%) increase for the DEA, a $15 million (+1.2%) increase for the ATF, and a $22 million (+1.1%) increase for the Offices of the U.S. Attorneys relative to the FY2017 enacted level. The committee proposed reducing overall funding for the FBI (-$19 million, -0.2%), though this is the result of an $84 million reduction in the FBI's Construction account. Like the House bill, the Senate committee-reported bill would have increased funding for the FBI's Salaries and Expenses account relative to the FY2017 enacted appropriation. The committee-reported bill would have also reduced funding for the State and Local Law Enforcement Assistance account (-$109 million, -8.6%) relative to the FY2017 enacted level. The Senate Committee on Appropriations largely declined to adopt the Administration's proposal to supplement funding for several grant accounts with transfers from the Crime Victims Fund. However, the committee-reported bill includes a transfer of $379 million from the Crime Victims Fund to the Office on Violence Against Women. For FY2018, DOJ received a total of $30.384 billion in funding, which included $30.299 billion in regular appropriations provided in the Consolidated Appropriations Act, 2018 (Division B, P.L. 115-141 ) and $85 million in emergency-designated funding provided in the Further Additional Supplemental Appropriations for Disaster Relief Requirements Act, 2018 ( P.L. 115-123 ). Total FY2018 funding for the department is 4.9% greater than the FY2017 appropriation (4.6% greater without emergency-designated funding) and 7.3% greater than the Administration's request (7.0% greater without emergency-designated funding). Nearly every DOJ account was funded at a level above the FY2017 enacted appropriation and the Administration's request, though there were a few exceptions. The FY2018 appropriation for the General Legal Activities account was $2 million less (-0.2%) than the Administration's request while the appropriation for the Research, Evaluation, and Statistics account was $21 million less (-18.9%) than the Administration's request. However, the latter was largely the result of funding for the Regional Information Sharing System (RISS) program being provided under the COPS account. The Administration requested funding for RISS under the Research, Evaluation, and Statistics account. For FY2018, all funding for the Office on Violence Against Women ($492 million) is provided by a transfer from the CVF. Congress did not adopt the Administration's proposal to supplement appropriations from the General Fund of the Treasury for the State and Local Law Enforcement Assistance and Juvenile Justice Programs accounts with transfers from the CVF. The House and Senate committee reports and the joint explanatory statement to accompany the Consolidated Appropriations Act were silent as to the Administration's workforce rightsizing initiative. However, the explanatory statement notes that any CJS agency that "plans a reduction-in-force shall notify the [House and Senate Appropriations Committees] by letter no later than 30 days in advance of the date of any such planned personnel action." Table 1 summarizes and compares the FY2017 appropriations, the President's FY2018 budget request, and the House-passed, Senate committee-reported, and enacted FY2018 appropriations for DOJ. The amounts in Table 1 reflect only new funding made available at the start of the fiscal year. Therefore, the amounts do not include any rescissions of unobligated or deobligated balances that may be counted as offsets to newly enacted appropriations, nor do they include any scorekeeping adjustments (e.g., the budgetary effects of provisions limiting the availability of the balance in the Crime Victims Fund). The Administration's annual budget submission to Congress is a reflection of its priorities. The Trump Administration has identified national security, violent crime, the opioid epidemic, transnational organized crime, and enforcing immigration laws as priorities for DOJ. These priorities coincide with issues that President Trump raised during the 2016 presidential campaign and the first few months of his Administration, including concerns about "lone wolf" terrorist attacks inspired by foreign terrorist organizations like the Islamic State, increasing violent crime in some U.S. cities, and the need for more stringent enforcement of the nation's immigration laws. The Administration formulated its FY2018 budget request assuming FY2017 funding levels that were based on the FY2017 annualized appropriation under the continuing resolutions (CR, P.L. 114-223 and P.L. 114-254 ). This means that requested program increases were considered relative to that CR and not the FY2017 enacted appropriation ( P.L. 115-31 ). The Administration requested $98 million in program increases for national security efforts at the FBI. Within the $98 million requested by the Administration, $41 million was for the FBI's efforts to combat cyber threats, $22 million was for combatting the threat of "going dark" (i.e., the inability of law enforcement to access certain data due to advancements in technology), $20 million was for addressing threats posed by foreign intelligence and domestic bad actors, $8 million was for additional surveillance of FBI high-priority targets, and $7 million was for the operation and maintenance of the FBI's Biometric Technology Center. In response, the House Committee on Appropriations noted in its report that it provided $48 million more than the FY2017 enacted appropriation for the FBI. The committee explained that the increase was necessary to help the FBI carry out its critical missions, which include supporting work on "confronting threats from foreign intelligence and insiders," and "helping the FBI stop computer intrusions, investigate cybercrime, and improve cybersecurity." The committee also stated that funding for the FBI was to support the programs of the FBI's Criminal Justice Information Services Division, including the Biometric Technology Center. However, the committee did not state if it chose to fund any of the specific program increases requested by the Administration. The Senate Committee on Appropriations noted in its report that within the funding provided for the FBI, the committee supports the requested program increases for cybersecurity activities. The committee's report was silent as to whether it supported any of the other program increases requested by the Administration. The explanatory statement states that Congress expects the FBI to use the funding provided for FY2018 to enhance its investigative and intelligence efforts related to terrorism, national security, and cyber threats. While the explanatory statement did not say whether Congress funded any of the Administration's requested increases, FY2018 funding included a $263 million increase for the FBI's Salaries and Expenses account (not including emergency-designated funding). The enacted appropriation was $308 million more than the Administration's request. The Trump Administration requested approximately $139 million for efforts to reduce violent crime, including the following: $19 million to implement the recommendations of the Task Force on Crime Reduction and Public Safety. Of this amount, $4 million would have been for the ATF, $6 million would be for the DEA, $4 million would be for the FBI, and $6 million would be for the USMS. $19 million for additional Assistant U.S. Attorneys to help prosecute violent crimes. $7 million for the ATF's National Integrated Ballistic Information Network (NIBIN), which allows for the capture and comparison of ballistic evidence to aid in solving violent crimes involving firearms. $4 million for the ATF to support advancements in technology for more accurate and timely firearm registrations. $9 million for the FBI to support additional personnel to conduct background checks submitted through the National Instant Criminal Background Check System (NICS). $70 million for the Project Safe Neighborhoods grant program under the State and Local Law Enforcement Assistance account. $12 million for the USMS to replace body armor, radios, fleet vehicles, light armored vehicles, and electronic surveillance equipment, and to support the U.S. Marshals' Special Operations Group's annual selection, specialty and mandatory recertification training, and related equipment. The House Committee on Appropriations' report noted that it fully funded the requested increase for the ATF's NIBIN program and additional safety equipment for deputy U.S. Marshals. The committee also stated that it provided funding for additional resources at the Office of the U.S. Attorneys for additional prosecutors to target violent crime and gang activity. The committee declined to provide $70 million for Project Safe Neighborhoods (the committee recommended $10 million). As mentioned above, the committee stated that funding for the FBI was to support the programs of the FBI's Criminal Justice Information Services Division, which includes NICS, but the committee did not state whether it provided funding for the program increases requested by the Administration. The committee's report was silent as to whether it provided funding for the other program increases requested by the Administration. The report to accompany S. 1662 was largely silent as to whether the Senate Committee on Appropriations provided funding for the program increases requested by the Administration. For example, the committee stated that its recommended funding supports the ATF's efforts to enforce firearms laws and perform regulatory oversight, including through the NIBIN program, but the report did not state whether the committee funded the Administration's requested program increases for the ATF. The Senate Committee on Appropriations noted that it fully funded the request for the FBI's Criminal Justice Information Services, including continued improvements to NICS. On the other hand, the committee declined to provide $70 million for Project Safe Neighborhoods (the committee recommended $7 million). The explanatory statement states that funding for the requested program increases was provided for the ATF and the USMS. The explanatory statement also states that Congress expects the FBI to adequately address increased demand for background checks for firearms purchases and improve NICS performance, including enhancing system availability, determination rates, and E-Check services. The agreement provided $20 million for Project Safe Neighborhoods instead of the $70 million requested by the Administration. The explanatory statement was silent as to funding for additional Assistant U.S. Attorneys to prosecute violent crimes and implementing the recommendations of the Task Force on Crime Reduction and Public Safety. The Trump Administration requested approximately $40 million at DOJ for efforts related to the opioid epidemic, including the following: $20 million for the DEA to target drug trafficking; support education and training efforts for pharmaceutical drug manufacturers, wholesalers, pharmacies, and practitioners; and support prescription drug take-back events. $9 million for the DEA's efforts to fight organizations engaging in the manufacture and distribution of pharmaceutical controlled substances in violation of the Controlled Substances Act. $9 million for heroin enforcement groups at the DEA. $3 million for the U.S. Attorneys to support a pilot program for Special Assistant United States Attorneys in "hot spots" around the country to provide additional prosecutorial support to federal criminal and civil drug diversion investigations. Funding for this program would be derived from the DEA's Diversion Control Fee Account. The House Committee on Appropriations stated in its report that it provided $15 million under the DEA's Salaries and Expenses account for enhancement of heroin enforcement activities and investigations of transnational criminal organizations involved in drug trafficking. The committee also would have provided $37 million under the DEA's Diversion Control Program for additional diversion investigators and tactical diversion squads, increasing drug take-back efforts, and increasing enforcement and analysis of new synthetic substances. Within this amount, $10 million was for the proposed U.S. Attorneys' "hot spots" pilot program. The report from the Senate Committee on Appropriations is largely silent as to whether the committee provided any of the program increases requested by the Administration for efforts related to the opioid epidemic. However, the committee noted that while it strongly supports efforts to fight heroin and illegal opioid abuse, it does not approve of funding from the DEA's Diversion Control Program being used for the proposed "hot spots" pilot program. The committee believed that the responsibilities of the pilot program are outside of the DEA's mission and that prosecution for overprescribing and illegal diversion of opioids should be handled by the Office of the U.S. Attorneys. In its report, the committee directed DOJ to use no less than $3 million of the funding provided for the Office of the U.S. Attorneys to conduct criminal and civil prosecutions into the illegal prescribing and dispensing of opioids. The explanatory statement states that additional funding was being provided for the DEA to "expand opioid and heroin enforcement efforts, including supporting existing heroin enforcement teams and establishing new ones; invest in the Fentanyl Signature Profiling Program and law enforcement safety; and accelerate efforts to dismantle transnational criminal organizations and cartels." The explanatory statement, by reference, also incorporates the Senate Committee on Appropriations' language regarding the proposed "hot spots" pilot program. Congress chose to provide additional direct support to the U.S. Attorneys Offices to combat opioid abuse. The Trump Administration requested approximately $19 million to target transnational organized crime (TOC), including the following: $6 million in additional OCDETF funding to support investigations and prosecutions that target high-priority TOC, OCDETF's heroin response strategy, and short-term deployment of federal law enforcement personnel to address violent crime. $7 million for the FBI to support ongoing investigations of TOC. $7 million for the DEA to investigate transnational criminal organizations responsible for trafficking large quantities of drugs into the country. The House Committee on Appropriations stated in its report that it provided $15 million under the DEA's Salaries and Expenses account for enhancement of heroin enforcement activities and investigations of transnational criminal organizations involved in drug trafficking. The committee also explained that funds are included under OCDEFT to support interagency task forces that target high-level drug trafficking organizations through coordinated, multijurisdictional investigations. The report from the Senate Committee on Appropriations was silent as to whether the committee provided funding for any of the program increases requested by the Administration. As mentioned above, the agreement provided additional funding to the DEA to help it "dismantle transnational criminal organizations and cartels." The explanatory statement also stated that additional OCDEFT funding was included to "enhance investigations and prosecutions of major drug trafficking organizations with a focus on reducing the availability of opioids." The explanatory statement was silent as to whether there was any additional funding for the FBI to specifically support investigations of TOC. For FY2018, the Trump Administration requested an additional $145 million for enforcing immigration laws, including the following: $75 million for additional EOIR immigration judges and support staff. $9 million for additional Deputy U.S. Marshals to provide court security and timely detainee processing. $50 million for additional housing, medical, and transportation costs for the USMS due to an increased detainee population resulting from expanded immigration law enforcement. $7 million for additional Assistant U.S. Attorneys to help prosecute offenses that are a result of expanded immigration law enforcement. $2 million for the Civil Division for additional personnel to defend challenges to the immigration laws, regulations, and policies. $2 million for the Environment and National Resources Division to help acquire real property along the Southwest border to be used to secure the border between the United States and Mexico. The House Committee on Appropriations noted in its report that it provided $4 million more than the amount requested for EOIR. The total amount provided would have supported 449 immigration judge teams, 65 more than the number of teams funded for FY2017. The committee noted that it fully funded the requested enhancements for immigration enforcement at the Offices of the U.S. Attorneys. The committee also provided the additional funding requested for the U.S. Marshals to support border security and immigration law enforcement. The report was silent as to whether the committee provided the additional funding requested for the Civil and Environmental and Natural Resources divisions. The Senate Committee on Appropriations was silent in its report as to whether it specifically provided funding for additional immigration judges, but it did fund the EOIR account at the level requested by the Administration. The report was silent as to whether the committee provided funding for any of the other program increases the Administration requested for immigration law enforcement. The explanatory statement directs DOJ to hire and deploy at least 100 additional immigration judge teams, with the goal of having 484 teams nationwide by 2019. The explanatory statement was silent as to whether funding was provided for any of the Administration's requested increases. In addition to the request for additional funding, the Administration's budget also proposed legislative language related to immigration enforcement and "sanctuary" jurisdictions that limit law enforcement participation with federal im migration enforcement activities (Section 219 of the general provisions for DOJ). Section 219 would amend Section 642 of the Illegal Immigration Reform and Immigrant Responsibility Act of 1996 (codified at 8 U.S.C. SS1373) by specifying, and arguably expanding, the type of information that federal, state, and local law enforcement entities may share with the Department of Homeland Security (DHS). The bar to limitations on information sharing would cover an alien's nationality, citizenship status, immigration status, removability, scheduled release date and time (for persons in custody), home address, work address, and contact information. While current law bars limitations on information sharing for any individual, Section 219 would narrow this prohibition to exclude from the bar on information sharing individuals in custody or suspected of violating U.S. law. Section 219 would have also required nonfederal law enforcement entities or officials to honor any lawful requests by DHS pursuant to its mandate to enforce immigration laws, including requests to detain individuals for up to 48 hours in order for DHS to obtain custody of them. Section 219 would have allowed DHS or DOJ to condition any grant of federal funds or cooperative agreements related to immigration, national security, law enforcement, and terrorism prevention and protection on the state's or locality's compliance with the provisions that bar limitations on information sharing. It would have also allowed DOJ and DHS to require state and local law enforcement agencies to honor DHS requests specified in Section 219 as a condition of grant funding. DHS or DOJ could have required that such grant and cooperative agreement applicants certify, as prescribed by DHS or DOJ, that they would comply with such conditions in their applications. Section 219 would also have allowed DHS or DOJ to enforce the above provisions through any lawful means. The Consolidated Appropriations Act, 2018 did not include the proposed Section 219.

The Department of Justice (DOJ) was established in 1870 with the Attorney General as its leader. Since its creation, DOJ has added additional agencies, offices, boards, and divisions to its organizational structure. DOJ, along with the judicial branch, operates the federal criminal justice system. The department enforces federal criminal and civil laws, including antitrust, civil rights, environmental, and tax laws. Through agencies such as the Federal Bureau of Investigation (FBI); the Drug Enforcement Administration (DEA); and the Bureau of Alcohol, Tobacco, Firearms, and Explosives (ATF), it investigates terrorism, organized and violent crime, illegal drugs, and gun and explosives violations, among others. Through the U.S. Marshals Service (USMS), it protects the federal judiciary, apprehends fugitives, and oversees the detention of alleged offenders who are not granted pretrial release. DOJ prosecutes individuals accused of violating federal laws, and it represents the U.S. government in court. DOJ's Bureau of Prisons (BOP) houses individuals accused or convicted of federal crimes. In addition to its role in administering the federal criminal justice system, the department also provides grants and training to state, local, and tribal law enforcement agencies and judicial and correctional systems. The Consolidated Appropriations Act, 2017 (P.L. 115-31) appropriated $28.962 billion for DOJ. The act provided $2.713 billion for the U.S. Marshals, $9.006 billion for the FBI, $2.103 billion for the DEA, $1.259 billion for the ATF, and $7.142 billion for the BOP. The remaining funding (approximately $6.739 billion) was for DOJ's other offices, such as the U.S. Attorneys Offices, the Executive Office for Immigration Review, and the Attorney General's office. The Trump Administration requested $28.205 billion for DOJ for FY2018. This amount was 2.6% less than the FY2017 enacted appropriation. The Administration proposed reductions for several DOJ accounts, including a $232 million (-2.6%) reduction for the FBI, a $340 million (-26.6%) reduction for State and Local Law Enforcement Assistance, and a $21 million (-8.3%) reduction for Juvenile Justice Programs. While the Administration's FY2018 budget request included several reductions for DOJ accounts, it also included several increases, including an additional $22 million (+1.1%) for the Office of the United States Attorneys, an $82 million (+5.6%) increase for the USMS's Federal Prisoner Detention account, a $76 million (+1.1%) increase for BOP's Salaries and Expenses account, and a $61 million (+2.9%) increase for the DEA. The House-passed bill (H.R. 3354) would have included $29.310 billion for DOJ, which was 1.2% greater than the FY2017 enacted appropriation and 3.5% greater than the Administration's request. The Senate committee-reported bill (S. 1662) would have included $29.068 billion for DOJ, which was 0.4% greater than the FY2017 enacted appropriation and 2.6% greater than the Administration's request. For FY2018, DOJ received a total of $30.384 billion in funding through the annual appropriations process, which included $30.299 billion in regular and $85 million in emergency-designated funding. Total FY2018 funding for the department is 4.9% greater than the FY2017 appropriation (4.6% greater without emergency-designated funding) and 7.3% greater than the Administration's request (7.0% greater without emergency-designated funding). Nearly every DOJ account was funded at a level higher than the FY2017 enacted appropriation and the Administration's request.

RS21606 -- NASA's Space Shuttle Columbia: Synopsis of the Report of the Columbia Accident InvestigationBoard September 2, 2003 The following synopsis focuses on what appear to be the major questions being asked about the CAIB's findings about the tragedy and recommendations on thefuture of the shuttle program. All quotations are from the CAIB report unless otherwise noted. What Caused the Columbia Accident? The Board "recognized early on that the accident was probably not ananomalous, random event, but rather likely rooted to some degree in NASA's history and the human space flightprogram's culture." (p. 9) Therefore, it alsolooked at "political and budgetary considerations, compromises, and changing priorities over the life" of the shuttleprogram, and "places as much weight onthese causal factors as on the ... physical cause...." (p. 9) The physical cause was damage to Columbia' s left wing by a 1.7 pound piece of insulating foam that detached from the left "bipod ramp" that connects theExternal Tank (1) to the orbiter, and struck the orbiter'sleft wing 81.9 seconds after launch. The foam strike created a hole in a Reinforced Carbon-Carbon(RCC) panel on the leading edge of the wing, allowing superheated air (perhaps exceeding 5,000 o F)to enter the wing during reentry. The extreme heat causedthe wing to fail structurally, creating aerodynamic forces that led to the disintegration of the orbiter. (Described indetail in Chapters 2 and 3.) Regarding organizational causes , the Board concluded the accident was -- ... rooted in the Space Shuttle Program's history and culture, including the original compromises that were requiredto gain approval for the Shuttle, subsequent years of resource constraints, fluctuating priorities, schedule pressures,mischaracterization of the Shuttle asoperational rather than developmental, and lack of an agreed national vision for human space flight. Cultural traitsand organizational practices detrimental tosafety were allowed to develop, including: reliance on past success as a substitute for sound engineering practices...,organizational barriers that preventedeffective communication of critical safety information and stifled professional differences of opinion; lack ofintegrated management across program elements;and the evolution of an informal chain of command and decision-making processes that operated outside theorganization's rules. (p.9) The Board found that there is a "broken safety culture " at NASA (pp. 184-189). Schedule pressure (pp. 131-139) related to construction of the InternationalSpace Station, budget constraints (pp. 102-105), and workforce reductions (pp. 106-110) also were factors. The Board concluded that the shuttle program"has operated in a challenging and often turbulent environment...." (p. 118) "It is to the credit of Space Shuttlemanagers and the Shuttle workforce that thevehicle was able to achieve its program objectives for as long as it did." (p. 119) Should the Shuttle Continue to Fly? The Board concluded that "the present Shuttle is not inherently unsafe"but the "observations and recommendations in this report are needed to make the vehicle safe enough to operate inthe coming years." (p. 208) CAIB "supportsreturn to flight for the Space Shuttle at the earliest date consistent with an overriding consideration: safety." (p. 208) NASA has a target of March/April 2004for return to flight, and Adm. Gehman stated in an interview on PBS' The NewsHour with Jim Lehrer on August26 that he saw no reason why NASA could notmeet that schedule. The CAIB report contains 29 recommendations (listed below) -- 23 technical and six organizational -- of which 15 must be implemented before the shuttlereturns to flight status. The others are "continuing to fly" recommendations assuming the shuttle will be used foryears to come. The Board recommended that,if the shuttle is to be used beyond 2010, that it be recertified (p. 209). But the Board said it reached an "inescapableconclusion" -- Because of the risks inherent in the original design of the Space Shuttle, because the design was based in manyaspects on now-obsolete technologies, and because the Shuttle is now an aging system but still developmental incharacter, it is in the nation's interest toreplace the Shuttle as soon as possible as the primary means for transporting humans to and from Earth orbit. (p. 210-211. Emphasis inoriginal.) Why Did NASA Decide Not to Obtain Imagery from DOD Satellites to Assess the Damage? A centralquestion during the investigation was why NASA did not ask the Department of Defense (DOD) to image the shuttlewith its high resolution ground- orspace-based systems to help assess whether the orbiter had been damaged by the foam. The Board found (pp.140-172) that three requests for imagery weremade by NASA engineers but through incorrect channels, plus there were several "missed opportunities"whenmanagers could have pursued the issue. Onerequest did reach the appropriate DOD personnel, but NASA canceled the request 90 minutes later. The Boardconcluded that the likely sequence of events wasthat the chair of STS-107's Mission Management Team (MMT), after informally learning that there had been a"request" for imagery, called three other MMTmembers and determined that none knew of a "requirement" for imagery. CAIB cited a flawed analysis of the extentto which the orbiter might have beendamaged by the foam that was too readily accepted by program managers, a low level of concern by programmanagers, a lack of clear communication, a lack ofeffective leadership, and a failure of the role of safety personnel as reasons why the imagery was not obtained. Whether such images would, in fact, have shownthe damage remains unclear, but the Board recommended that such images now be taken on all shuttle missions. Could the Crew Have Been Saved? The Board concluded that the crew died from "blunt trauma andhypoxia" (lack of oxygen) after the crew cabin separated from the rest of the disintegrating shuttle and, itself,disintegrated; there was no explosion. (p. 77) TheBoard asked NASA to evaluate two options for returning the crew safely if the degree of damage had beenunderstood early in the mission: repairing thedamage on-orbit, or rescuing the crew with another shuttle mission. The repair option "while logisticallyviable....relied on so many uncertainties that NASArated this option 'high risk.'" (p. 173) The rescue option "was considered challenging but feasible." (p. 174) What Are the "Echoes" of Challenger? Former shuttle astronaut Sally Ride served on the RogersCommission that investigated the January 1986 Challenger accident, which claimed the lives of sevenastronauts, and on CAIB. During the Columbia investigation, she said she heard "echoes" of Challenger as it became clear that the accidentresulted from NASA failing to recognize that a technical failure(bipod ramp foam shedding) that had occurred on previous shuttle flights could have safety-of-flight implicationseven if the earlier missions were completedsuccessfully. In the case of Challenger , it was erosion of seals (O-rings) between segments of the SolidRocket Booster, which had been noted on previousmissions. Some engineers warned NASA not to launch Challenger that day because unusually coldweather could have weakened the resiliency of the O-rings. They were overruled. CAIB concluded that "both accidents were 'failures of foresight'" and the parallels betweenthem demonstrate that: "the causes of theinstitutional failure responsible for Challenger have not been fixed"; "if these persistent, systemic flawsare not resolved, the scene is set for another accident";and that while individuals must be accountable for their actions, "NASA's problems cannot be solved simply byretirements, resignations, or transferringpersonnel." (p. 195) CAIB's 29 recommendations are compiled in Chapter 11 of its report. Adm. Gehman stated at the Board's August 26 press conference that there is no hierarchyin the recommendations -- all have equal weight. The Board also made 27 "observations" in Chapter 10. Followingare abbreviated versions of therecommendations -- separated into those that must be implemented prior to Return to Flight, and those that are"continuing to fly" recommendations -- andobservations. Some have been combined for brevity. Return to Flight (RTF) Recommendations. CAIB recommends that NASA: initiate an aggressive program to eliminate all External Tank foam shedding; initiate a program to increase the orbiter's ability to sustain minor debris damage; develop and implement a comprehensive inspection plan to assess the structural integrity of the RCC panels,supporting structure, and attaching hardware; develop a practical capability to inspect and effect emergency repairs to the orbiter's thermal protection system(TPS) both when near the International SpaceStation and when operating away from it, and accomplish an on-orbit TPS inspection; upgrade the ability to image the shuttle during its ascent to orbit; obtain and downlink high resolution images of the External Tank after it separates from the orbiter, and ofcertain orbiter thermal protection systems; ensure that on-orbit imaging of each shuttle flight by Department of Defense satellites is a standardrequirement; test and qualify "bolt catchers" used on the shuttle; require that at least two employees attend final closeouts and intertank area hand-spraying procedures whenapplying foam to the External Tank; require NASA and its contractors to use the industry-standard definition of "foreign object debris"; adopt and maintain a shuttle flight schedule that is consistent with available resources; implement an expanded training program for the Mission Management Team; prepare a detailed plan for creating an independent Technical Engineering Authority, independent safetyprogram, and reorganized space shuttle integrationoffice; and develop an interim program of closeout photographs for all critical sub-systems that differ from engineeringdrawings. Continuing to Fly Recommendations. The Board recommends thatNASA: increase the orbiter's ability to reenter the atmosphere with minor leading edge damage to the extentpossible; develop a better database to understand the characteristics of Reinforced Carbon-Carbon (RCC) by destructivetesting and evaluation; improve the maintenance of launch pad structures to minimize leaching of zinc primer onto RCC; obtain sufficient RCC panel spares so maintenance decisions are not subject to external pressures relating toschedules, costs, or other considerations; develop, validate, and maintain physics-based computer models to evaluate Thermal Protection Systemdamage from debris impacts; maintain and update the Modular Auxiliary Data System (MADS) on each orbiter to include current sensorand data acquisition technologies, and redesignthe MADS so they can be reconfigured during flight; develop a state-of-the-art means to inspect orbiter wiring; operate the shuttle with the same degree of safety for micrometeoroid and orbital debris as is used in the spacestation program, and change guidelines torequirements; establish an independent Technical Engineering Authority that is responsible for technical requirements andall waivers to them, which should be fundeddirectly from NASA Headquarters and have no connection to or responsibility for schedule or program cost; give direct line authority over the entire shuttle safety organization to the Headquarters Office of Safety andMission Assurance, which should beindependently resourced; reorganize the Space Shuttle Integration Office to make it capable of integrating all elements of the SpaceShuttle Program, including the Orbiter; develop and conduct a vehicle recertification prior to operating the shuttle beyond 2010 and includerecertification requirements in the Shuttle Life ExtensionProgram; and provide adequate resources for a long-term program to upgrade shuttle engineering drawings. Observations. Chapter 10 lists 27 observations -- "significant issues thatare potentially serious matters thatshould be addressed ... because they fall into the category of 'weak signals' that could be indications of futureproblems." Therefore, NASA should: develop and implement a public risk acceptability policy for launch and reentry of space vehicles andunmanned aircraft; develop and implement a plan to mitigate the risk that shuttle flights pose to the general public; study the Columbia debris to facilitate realistic estimates of the risk to the public during orbiterreentry; incorporate knowledge gained from Columbia in requirements for future crewed vehicles inassessing the feasibility of vehicles that could ensure crewsurvival even if the vehicle is destroyed; perform an independent review of the Kennedy Space Center (KSC) Quality Planning Requirements Documentto address the quality assurance program andits administration, consolidate KSC's Quality Assurance programs under one Mission Assurance Office that reportsto the Center Director, require qualityassurance managers to work with NASA and perhaps DOD to develop training programs, and examine which areasof ISO 9000/9001 truly apply to a20-year old research and development system like the space shuttle; use statistical sampling for Quality and Engineering review of work documents for the next shuttle flight(STS-114); implement United Space Alliance's (USA's) suggestions for process improvement; create an oversight process to statistically sample the work performed by USA technicians to ensure processcontrol, compliance, and consistency; make every effort to achieve greater stability, consistency, and predictability in Orbiter Major Modificationplanning, scheduling, and work standards; better understand workforce and infrastructure requirements, match them against capabilities, and take actionsto avoid exceeding thresholds; continue to work with the Air Force on aging systems, service life extension, planning and scheduling,workforce management, training, and qualityassurance; determine how the shuttle program office will meet the challenges of inspecting and maintaining an agingshuttle fleet; include non-destructive analysis of the potential impacts on structural integrity when evaluating corrosiondamage, make long-term corrosion detection afunding priority, develop non-destructive inspections to find hidden corrosion, and establish orbiter-specificcorrosion rates for orbiter-specificenvironments; do not use Teflon and Molybdenum Disulfide in the carrier panel bolt assembly; mitigate galvanic coupling between aluminum and steel alloys; review the use of Room Temperature Vulcanizing 560 and Koropon; assure the continued presence of compressive stresses in A-286 bolts in their acceptance and qualificationprocedures; consider a redesign of the "hold-down" bolt system; reinstate a safety factor of 1.4 for the solid rocket booster attachment rings; assess whether upgrading to digital test equipment will provide the reliability and accuracy needed to maintainthe shuttle through 2020; and implement an agency-wide strategy for leadership and management training that provides a more consistentand integrated approach to career development. Air Force Brig. Gen. Duane Deal, a CAIB member, wrote a "supplement" that is scheduled to be published in Volume II as Appendix D. Some of the views inthe supplement were reported by the media on August 27. CAIB supplied a copy of the document to CRS,emphasizing that it represents supplemental, notdissenting, views. Gen. Deal expressed concern that NASA may not fully implement the CAIB's recommendations, and particularly its observations. "History shows that NASAoften ignores strong recommendations; without a culture change, it is overly optimistic to believe NASA will tacklesomething relegated to an 'observation'when it has a record of ignoring recommendations." He said the supplement is written from the perspective ofsomeone "who fears the [CAIB] report hasbypassed some items that could prevent 'the next accident' from occurring -- the 'next' O-ring or the 'next' bipodramp." He believes the observations shouldhave been characterized as "'strong signals' that are indications of present and future problems" rather than "weaksignals" that could indicate future problems.Among the areas he listed as needing further attention are: Quality Assurance (unresponsive management, staffinglevels, grade levels, inspector qualifications,employee training, providing necessary tools, government inspections, and quality program surveillance); OrbiterCorrosion; Solid Rocket Booster ExternalTank Attach Ring; Crew Survivability; Shiftwork and Overtime; security of Redesigned Solid Rocket Motors whenthey are shipped from the manufacturer; andsecurity at NASA's Michoud Assembly Facility where the External Tanks are assembled.

NASA's space shuttle Columbia broke apart on February 1, 2003 as itreturned to Earth from a 16-day sciencemission. All seven astronauts aboard were killed. NASA created the Columbia Accident InvestigationBoard (CAIB), chaired by Adm. (Ret.) Harold Gehman,to investigate the accident. The Board released its report (available at http://www.caib.us) on August 26, 2003,concluding that the tragedy was caused bytechnical and organizational failures. The CAIB report included 29 recommendations, 15 of which the Boardspecified must be completed before the shuttlereturns to flight status. This report provides a brief synopsis of the Board's conclusions, recommendations, andobservations. Further information on Columbiaand issues for Congress are available in CRS Report RS21408. This report will not be updated.

When a Senate committee reports a measure to the Senate, it usually prepares a written report that describes the purposes and provisions of the measure. Senate rules and statutes specify items that must be included in committee reports. Senate committees also may include additional items in their reports. For more information on legislative process, see http://www.crs.gov/ products/ guides/ guidehome.shtml . The results of any roll call vote on ordering a measure reported must be included in Senate reports. The results of other roll call votes, on the measure or any amendment to it, and tabulations of votes cast by each member in favor and against a question must be included unless the votes were "previously announced" by the committee. (Rule XXVI, paragraphs 7(b) and (c).) In general, the Senate report on a measure (except continuing appropriations), which provides new budget authority, or changes revenues or tax expenditures, must contain: (a) a Congressional Budget Office (CBO) cost estimate for the first fiscal year affected and the four subsequent fiscal years; and (b) a CBO estimate of new budget authority provided for assistance to state and local governments. The Senate Appropriations Committee also must include a comparison of the levels in an appropriations measure to the appropriate subcommittee allocations (the so-called 302(b) allocations). (Section 308(a) of the Congressional Budget Act. Related requirements are contained in Section 402 of the Budget Act, and Rule XXVI, paragraph 11(a).) An authorizing committee's report on a public bill or joint resolution that includes a federal mandate must contain an identification and description of the mandate. This must comprise the direct costs to state, local, and tribal governments, and the private sector; an assessment of the anticipated costs and benefits; and a statement on the effect on both the public and private sectors, including on the competitive balance between them. If the mandates are intergovernmental, the report also must contain statements on the amount of authorizations under federal financial assistance programs; whether the mandates are partly or entirely unfunded; how any funding will be allocated; additional sources of federal financial assistance; and a statement of how the committee intends States to implement any funding reductions. Reports on measures containing federal intergovernmental or private sector mandates also must contain CBO statements on the direct costs of the mandates. (Sections 423 and 424 of the Congressional Budget Act, as amended.) A report by an authorizing committee on a public bill or joint resolution must contain, if relevant, a statement on the extent to which the measure preempts any state, local, or tribal law, and the effect of any such preemption. (Section 423 of the Congressional Budget Act, as amended.) A committee report (except by the Appropriations Committee) on a public bill or joint resolution generally must contain an evaluation of its regulatory impact, including information on (a) the individuals and businesses who would be regulated; (b) the economic impact of regulation on affected individuals, consumers, and businesses; (c) the impact on personal privacy; and (d) the amount of paperwork and record keeping required. These estimates are not required if the report states why compliance is "impracticable." (Rule XXVI, paragraphs 11(b) and (c).) A report on a bill or joint resolution relating to terms and conditions of employment or access to public services or accommodations must describe how the provisions apply to the legislative branch. If a provision is not applicable to the legislative branch, the report must explain why. ( P.L. 104-1 , Section 102(b)(3).) A committee report on a measure that changes existing law must contain: (a) the text of the statute, or part thereof, proposed to be changed; and (b) a comparative print of the part of the measure making the change and the statute proposed to be amended. This information is not required if the report states that its omission is necessary "to expedite the business of the Senate." (Rule XXVI, paragraph 12.) If a request is made at the time a measure is ordered reported, a member of any committee (except Appropriations) is entitled to at least three calendar days to prepare supplemental, minority, or additional views for inclusion in the committee report. (Rule XXVI, paragraph 10(c).) Senate committee reports typically outline the need and purpose for the legislation. Reports may include a brief legislative history of the measure, and possibly, related or earlier measures. There may also be a section-by-section (or title-by-title) summary of the legislation. Statements of legislative intent are sometimes included, to guide the executive branch in implementing the law, and to assist the judicial branch in interpreting the law on an issue before a court. Executive branch opinions requested by the committee may also be printed in the report. Senate committee reports may contain additional items that explain the formation, language, and impact of the legislation.

When a Senate committee reports a measure to the Senate, it usually prepares a written report that describes the purposes and provisions of the measure. Senate rules and statutes specify items that must be included in committee reports. Senate committees also may include additional items in their reports. For more information on legislative process, see http://www.crs.gov/ products/ guides/ guidehome.shtml .

Historically, electric utilities have been regarded as natural monopolies requiring regulationat the state and federal levels. The Energy Policy Act of 1992 (EPACT, P.L. 102-486 ) removed anumber of regulatory barriers to electricity generation in an effort to increase supply and introducecompetition, and further legislation has been introduced and debated to resolve remaining issuesaffecting transmission, reliability, and other restructuring concerns. Electric utility provisions are included in comprehensive energy legislation that has passedboth the House and Senate. The House passed H.R. 6 on April 11, 2003. On July 31,2003, the Senate suspended debate on S. 14 , the comprehensive energy bill that hadbeen drafted by the Energy and Natural Resources Committee, and instead passed H.R. 6with the text of the Senate-passed version of H.R. 4 from the 107th Congress. For acomparison of the House- and Senate-passed versions of H.R. 6, see CRS Report RL32033, Omnibus Energy Legislation (H.R. 6): Side-by-Side Comparison of Non-TaxProvisions . Before debate on S. 14 was suspended, Senator Domenici proposed S.Amdt. 1412 on July 29, 2003, to completely replace the electricity title of S.14 as introduced in the Senate. The proposed amendment was withdrawn on July 31,2003, and is not included in the Senate-passed energy bill. However, majority staff of the SenateEnergy and Natural Resources Committee have indicated that provisions of the amendment mightbe brought up in conference. (1) Title VI of the House-passed H.R. 6 would, in part, provide for incentive-basedtransmission rates, allow transmission owners in certain instances to exercise the right of eminentdomain to site new transmission lines, create an electric reliability organization, give new, butlimited, authority to the Federal Energy Regulatory Commission (FERC) over municipal andcooperative transmission systems, and clarify the right of transmission owners to serve existingcustomers (native load). In addition, the House bill would repeal the Public Utility Holding Company Act (PUHCA)and give FERC and state public utility commissions access to books and records, prospectivelyrepeal the mandatory purchase requirement of the Public Utility Regulatory Policies Act of 1978(PURPA), and require utilities to provide real-time rates and time-of-use metering. The Houseversion of H.R. 6 would establish market transparency rules, explicitly prohibitround-trip trading, and increase criminal penalties under the Federal Power Act. Like the House-passed electricity provisions of H.R. 6 , S.Amdt. 1412 would, in a more limited fashion, give FERC rate authority over municipal and cooperativetransmission systems, create an electric reliability organization, repeal PUHCA and give FERC andstate public utility commissions access to books and records, prospectively repeal the mandatorypurchase requirement of PURPA, clarify the right of transmission owners to serve native load,explicitly prohibit round-trip trading, establish market transparency rules, and increase criminalpenalties under the Federal Power Act. Unlike the House-passed H.R. 6 , S.Amdt. 1412 does not contain provisions that would allow transmission owners to exercise the right of eminent domain to site newtransmission lines. S.Amdt. 1412 contains provisions that are not included in the House-passed H.R. 6 . These include provisions that prohibit FERC from requiring utilities to transferoperational control of transmission facilities to a regional transmission organization (RTO), giveauthority to power marketing administrations and the Tennessee Valley Authority to join RTOs,remand FERC's Standard Market Design (SMD) notice of proposed rulemaking, and strengthenFERC's merger review authority. For additional information, see CRS Report RL32728 , Electric Utility Regulatory Reform:Issues for the 109th Congress .

Electric utility provisions are included in comprehensive energy legislation that has passedboth the House and Senate. The House passed H.R. 6 on April 11, 2003. On July 31,2003, the Senate suspended debate on S. 14 , the comprehensive energy bill that hadbeen reported by the Energy and Natural Resources Committee. It then passed H.R. 6 withthe text of the Senate-passed version of H.R. 4 from the 107th Congress. For acomparison of the House- and Senate-passed versions of H.R. 6, see CRS Report RL32033, Omnibus Energy Legislation (H.R. 6): Side-by-Side Comparison of Non-TaxProvisions . Before debate on S. 14 was suspended, Senator Domenici proposed S.Amdt. 1412 on July 29, 2003, to completely replace the electricity title of S.14 as introduced in the Senate. The proposed amendment was withdrawn on July 31,2003. Although S.Amdt. 1412 is not included in the Senate-passed bill that will beconsidered in conference, there are indications that provisions of the amendment might be broughtup. Both the House-passed electricity provisions in H.R. 6 and those in S.Amdt. 1412 would give limited rate authority to the Federal Energy RegulatoryCommission (FERC) over municipal and cooperative transmission systems; create an electricreliability organization; repeal the Public Utility Holding Company Act (PUHCA) and give FERCand state public utility commissions access to books and records; prospectively repeal the mandatorypurchase requirement of the Public Utility Regulatory Policies Act (PURPA); explicitly prohibitround-trip trading; establish market transparency rules; protect native load consumers (existingcustomers); and increase criminal penalties under the Federal Power Act. Title VI of the House-passed H.R. 6 would, in part, provide for incentive-basedtransmission rates, allow transmission owners in certain instances to exercise the right of eminentdomain to site new transmission lines, create an electric reliability organization, and clarify the rightof transmission owners to serve existing customers (native load). Unlike the House-passed H.R.6, S.Amdt. 1412 does not contain provisions that would allow transmissionowners to exercise the right of eminent domain to site new transmission lines. S.Amdt. 1412 contains provisions that are not included in the House-passed H.R. 6 . These include provisions that prohibit FERC from requiring utilities to transferoperational control of transmission facilities to a regional transmission organization (RTO), giveauthority to power marketing administrations and the Tennessee Valley Authority (TVA) to joinRTOs, remand the FERC Standard Market Design (SMD) notice of proposed rulemaking, andstrengthen FERC's merger review authority. This report will not be updated.